Correlation Between Shandong and Guangzhou Automobile
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By analyzing existing cross correlation between Shandong Hi Speed RoadBridge and Guangzhou Automobile Group, you can compare the effects of market volatilities on Shandong and Guangzhou Automobile 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 Shandong with a short position of Guangzhou Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong and Guangzhou Automobile.
Diversification Opportunities for Shandong and Guangzhou Automobile
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shandong and Guangzhou is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Hi Speed RoadBridge and Guangzhou Automobile Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Automobile and Shandong 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 Shandong Hi Speed RoadBridge are associated (or correlated) with Guangzhou Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Automobile has no effect on the direction of Shandong i.e., Shandong and Guangzhou Automobile go up and down completely randomly.
Pair Corralation between Shandong and Guangzhou Automobile
Assuming the 90 days trading horizon Shandong is expected to generate 1.16 times less return on investment than Guangzhou Automobile. But when comparing it to its historical volatility, Shandong Hi Speed RoadBridge is 1.18 times less risky than Guangzhou Automobile. It trades about 0.08 of its potential returns per unit of risk. Guangzhou Automobile Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 780.00 in Guangzhou Automobile Group on September 27, 2024 and sell it today you would earn a total of 167.00 from holding Guangzhou Automobile Group or generate 21.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Hi Speed RoadBridge vs. Guangzhou Automobile Group
Performance |
| Timeline |
| Shandong Hi Speed |
| Guangzhou Automobile |
Shandong and Guangzhou Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong and Guangzhou Automobile
The main advantage of trading using opposite Shandong and Guangzhou Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong position performs unexpectedly, Guangzhou Automobile 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 Guangzhou Automobile will offset losses from the drop in Guangzhou Automobile's long position.| Shandong vs. Ming Yang Smart | Shandong vs. 159681 | Shandong vs. 159005 | Shandong vs. Loctek Ergonomic Technology |
| Guangzhou Automobile vs. New China Life | Guangzhou Automobile vs. Ming Yang Smart | Guangzhou Automobile vs. 159681 | Guangzhou Automobile vs. 159005 |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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