Correlation Between Automobile and Golden Bridge
Can any of the company-specific risk be diversified away by investing in both Automobile and Golden Bridge 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 Automobile and Golden Bridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automobile Pc and Golden Bridge Investment, you can compare the effects of market volatilities on Automobile and Golden Bridge 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 Automobile with a short position of Golden Bridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and Golden Bridge.
Diversification Opportunities for Automobile and Golden Bridge
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Automobile and Golden is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and Golden Bridge Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Bridge Investment and Automobile 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 Automobile Pc are associated (or correlated) with Golden Bridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Bridge Investment has no effect on the direction of Automobile i.e., Automobile and Golden Bridge go up and down completely randomly.
Pair Corralation between Automobile and Golden Bridge
Assuming the 90 days trading horizon Automobile Pc is expected to generate 2.88 times more return on investment than Golden Bridge. However, Automobile is 2.88 times more volatile than Golden Bridge Investment. It trades about 0.04 of its potential returns per unit of risk. Golden Bridge Investment is currently generating about -0.23 per unit of risk. If you would invest 68,000 in Automobile Pc on August 28, 2024 and sell it today you would earn a total of 1,000.00 from holding Automobile Pc or generate 1.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automobile Pc vs. Golden Bridge Investment
Performance |
| Timeline |
| Automobile Pc |
| Golden Bridge Investment |
Automobile and Golden Bridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automobile and Golden Bridge
The main advantage of trading using opposite Automobile and Golden Bridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile position performs unexpectedly, Golden Bridge 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 Golden Bridge will offset losses from the drop in Golden Bridge's long position.| Automobile vs. Busan Industrial Co | Automobile vs. Busan Ind | Automobile vs. Mirae Asset Daewoo | Automobile vs. UNISEM Co |
| Golden Bridge vs. LB Investment | Golden Bridge vs. Samyang Foods Co | Golden Bridge vs. Dongwon Metal Co | Golden Bridge vs. Daiyang Metal Co |
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 Stocks Directory module to find actively traded stocks across global markets.
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