Correlation Between China Longyuan and Guangzhou Automobile
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By analyzing existing cross correlation between China Longyuan Power and Guangzhou Automobile Group, you can compare the effects of market volatilities on China Longyuan 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 China Longyuan with a short position of Guangzhou Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Longyuan and Guangzhou Automobile.
Diversification Opportunities for China Longyuan and Guangzhou Automobile
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Guangzhou is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding China Longyuan Power and Guangzhou Automobile Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Automobile and China Longyuan 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 China Longyuan Power 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 China Longyuan i.e., China Longyuan and Guangzhou Automobile go up and down completely randomly.
Pair Corralation between China Longyuan and Guangzhou Automobile
Assuming the 90 days trading horizon China Longyuan Power is expected to under-perform the Guangzhou Automobile. In addition to that, China Longyuan is 1.1 times more volatile than Guangzhou Automobile Group. It trades about -0.01 of its total potential returns per unit of risk. Guangzhou Automobile Group is currently generating about 0.0 per unit of volatility. If you would invest 895.00 in Guangzhou Automobile Group on August 25, 2024 and sell it today you would lose (32.00) from holding Guangzhou Automobile Group or give up 3.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Longyuan Power vs. Guangzhou Automobile Group
Performance |
| Timeline |
| China Longyuan Power |
| Guangzhou Automobile |
China Longyuan and Guangzhou Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Longyuan and Guangzhou Automobile
The main advantage of trading using opposite China Longyuan and Guangzhou Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Longyuan 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.| China Longyuan vs. Youyou Foods Co | China Longyuan vs. Hang Xiao Steel | China Longyuan vs. City Development Environment | China Longyuan vs. Air China Ltd |
| Guangzhou Automobile vs. Lutian Machinery Co | Guangzhou Automobile vs. China Longyuan Power | Guangzhou Automobile vs. Changshu Tongrun Auto | Guangzhou Automobile vs. PetroChina Co Ltd |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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