Correlation Between Guangdong Investment and Meta Financial

Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and Meta Financial 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 Meta Financial 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 Meta Financial Group, you can compare the effects of market volatilities on Guangdong Investment and Meta Financial 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 Meta Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Meta Financial.

Diversification Opportunities for Guangdong Investment and Meta Financial

-0.11

Correlation Coefficient

Guangdong Investment  Meta Financial

Good diversification

The 3 months correlation between Guangdong and Meta is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Meta Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Financial 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 Meta Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Financial Group has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Meta Financial go up and down completely randomly.

Pair Corralation between Guangdong Investment and Meta Financial

Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 1.35 times more return on investment than Meta Financial. However, Guangdong Investment is 1.35 times more volatile than Meta Financial Group. It trades about 0.07 of its potential returns per unit of risk. Meta Financial Group is currently generating about 0.05 per unit of risk. If you would invest  67.00  in Guangdong Investment Limited on April 23, 2025 and sell it today you would earn a total of  6.00  from holding Guangdong Investment Limited or generate 8.96% 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.  Meta Financial 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 fragile basic indicators, Guangdong Investment may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Meta Financial Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Financial Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Meta Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Guangdong Investment and Meta Financial

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

The idea behind Guangdong Investment Limited and Meta Financial 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.