Correlation Between Zhengzhou Qianweiyangchu and Guangzhou Automobile
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By analyzing existing cross correlation between Zhengzhou Qianweiyangchu Food and Guangzhou Automobile Group, you can compare the effects of market volatilities on Zhengzhou Qianweiyangchu 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 Zhengzhou Qianweiyangchu with a short position of Guangzhou Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhengzhou Qianweiyangchu and Guangzhou Automobile.
Diversification Opportunities for Zhengzhou Qianweiyangchu and Guangzhou Automobile
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Zhengzhou and Guangzhou is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Zhengzhou Qianweiyangchu Food and Guangzhou Automobile Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Automobile and Zhengzhou Qianweiyangchu 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 Zhengzhou Qianweiyangchu Food 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 Zhengzhou Qianweiyangchu i.e., Zhengzhou Qianweiyangchu and Guangzhou Automobile go up and down completely randomly.
Pair Corralation between Zhengzhou Qianweiyangchu and Guangzhou Automobile
Assuming the 90 days trading horizon Zhengzhou Qianweiyangchu Food is expected to generate 1.52 times more return on investment than Guangzhou Automobile. However, Zhengzhou Qianweiyangchu is 1.52 times more volatile than Guangzhou Automobile Group. It trades about 0.11 of its potential returns per unit of risk. Guangzhou Automobile Group is currently generating about 0.02 per unit of risk. If you would invest 3,093 in Zhengzhou Qianweiyangchu Food on August 29, 2024 and sell it today you would earn a total of 255.00 from holding Zhengzhou Qianweiyangchu Food or generate 8.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhengzhou Qianweiyangchu Food vs. Guangzhou Automobile Group
Performance |
| Timeline |
| Zhengzhou Qianweiyangchu |
| Guangzhou Automobile |
Zhengzhou Qianweiyangchu and Guangzhou Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhengzhou Qianweiyangchu and Guangzhou Automobile
The main advantage of trading using opposite Zhengzhou Qianweiyangchu and Guangzhou Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhengzhou Qianweiyangchu 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.The idea behind Zhengzhou Qianweiyangchu Food and Guangzhou Automobile 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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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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