Correlation Between Guangdong Investment and VITEC SOFTWARE

Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and VITEC SOFTWARE 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 Guangdong Investment and VITEC SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guangdong Investment Limited and VITEC SOFTWARE GROUP, you can compare the effects of market volatilities on Guangdong Investment and VITEC SOFTWARE 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 Guangdong Investment with a short position of VITEC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and VITEC SOFTWARE.

Diversification Opportunities for Guangdong Investment and VITEC SOFTWARE

-0.15

Correlation Coefficient

Guangdong Investment  VITEC SOFTWARE

Good diversification

The 3 months correlation between Guangdong and VITEC is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and VITEC SOFTWARE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VITEC SOFTWARE GROUP and Guangdong Investment 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 Guangdong Investment Limited are associated (or correlated) with VITEC SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VITEC SOFTWARE GROUP has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and VITEC SOFTWARE go up and down completely randomly.

Pair Corralation between Guangdong Investment and VITEC SOFTWARE

Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 0.75 times more return on investment than VITEC SOFTWARE. However, Guangdong Investment Limited is 1.34 times less risky than VITEC SOFTWARE. It trades about 0.07 of its potential returns per unit of risk. VITEC SOFTWARE GROUP is currently generating about -0.08 per unit of risk. If you would invest  68.00  in Guangdong Investment Limited on April 24, 2025 and sell it today you would earn a total of  6.00  from holding Guangdong Investment Limited or generate 8.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Guangdong Investment Limited  vs.  VITEC SOFTWARE GROUP

Guangdong Investment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Investment Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Guangdong Investment may actually be approaching a critical reversion point that can send shares even higher in August 2025.

VITEC SOFTWARE GROUP

Risk-Adjusted Performance

Very Weak

Over the last 90 days VITEC SOFTWARE GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Guangdong Investment and VITEC SOFTWARE

The main advantage of trading using opposite Guangdong Investment and VITEC SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, VITEC SOFTWARE 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 VITEC SOFTWARE will offset losses from the drop in VITEC SOFTWARE's long position.

The idea behind Guangdong Investment Limited and VITEC SOFTWARE GROUP 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.