Correlation Between Suez SA and Guangdong Investment

Can any of the company-specific risk be diversified away by investing in both Suez SA and Guangdong Investment at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Suez SA and Guangdong Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Suez SA and Guangdong Investment Limited, you can compare the effects of market volatilities on Suez SA and Guangdong Investment and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Suez SA with a short position of Guangdong Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suez SA and Guangdong Investment.

Diversification Opportunities for Suez SA and Guangdong Investment

0.0

Correlation Coefficient

Suez SA  Guangdong Investment

Pay attention - limited upside

The 3 months correlation between Suez and Guangdong is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Suez SA and Guangdong Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Investment and Suez SA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Suez SA are associated (or correlated) with Guangdong Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Investment has no effect on the direction of Suez SA i.e., Suez SA and Guangdong Investment go up and down completely randomly.

Pair Corralation between Suez SA and Guangdong Investment

If you would invest (100.00) in Suez SA on January 18, 2024 and sell it today you would earn a total of  100.00  from holding Suez SA or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Suez SA  vs.  Guangdong Investment Limited

Suez SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suez SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Suez SA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Guangdong Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guangdong Investment Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Suez SA and Guangdong Investment

The main advantage of trading using opposite Suez SA and Guangdong Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suez SA position performs unexpectedly, Guangdong Investment can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Guangdong Investment will offset losses from the drop in Guangdong Investment's long position.

The idea behind Suez SA and Guangdong Investment Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Share Portfolio module to track or share privately all of your investments from the convenience of any device.