Correlation Between CNFinance Holdings and Guild Holdings

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

By analyzing existing cross correlation between CNFinance Holdings and Guild Holdings Co, you can compare the effects of market volatilities on CNFinance Holdings and Guild Holdings 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 CNFinance Holdings with a short position of Guild Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNFinance Holdings and Guild Holdings.

Diversification Opportunities for CNFinance Holdings and Guild Holdings

0.07

Correlation Coefficient

CNFinance Holdings  Guild Holdings

Significant diversification

The 3 months correlation between CNFinance and Guild is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding CNFinance Holdings and Guild Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guild Holdings and CNFinance Holdings 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 CNFinance Holdings are associated (or correlated) with Guild Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guild Holdings has no effect on the direction of CNFinance Holdings i.e., CNFinance Holdings and Guild Holdings go up and down completely randomly.

Pair Corralation between CNFinance Holdings and Guild Holdings

Considering the 90-day investment horizon CNFinance Holdings is expected to under-perform the Guild Holdings. In addition to that, CNFinance Holdings is 3.17 times more volatile than Guild Holdings Co. It trades about -0.13 of its total potential returns per unit of risk. Guild Holdings Co is currently generating about -0.07 per unit of volatility. If you would invest  1,400  in Guild Holdings Co on August 31, 2024 and sell it today you would lose (41.00) from holding Guild Holdings Co or give up 2.93% of portfolio value over 90 days.

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

CNFinance Holdings  vs.  Guild Holdings Co

CNFinance Holdings

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CNFinance Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, CNFinance Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Guild Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guild Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with CNFinance Holdings and Guild Holdings

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

The idea behind CNFinance Holdings and Guild Holdings Co 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.