Correlation Between Great Wall and Gordon Auto
Can any of the company-specific risk be diversified away by investing in both Great Wall and Gordon Auto 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 Great Wall and Gordon Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Wall Enterprise and Gordon Auto Body, you can compare the effects of market volatilities on Great Wall and Gordon Auto 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 Great Wall with a short position of Gordon Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and Gordon Auto.
Diversification Opportunities for Great Wall and Gordon Auto
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Great and Gordon is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Enterprise and Gordon Auto Body in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gordon Auto Body and Great Wall 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 Great Wall Enterprise are associated (or correlated) with Gordon Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gordon Auto Body has no effect on the direction of Great Wall i.e., Great Wall and Gordon Auto go up and down completely randomly.
Pair Corralation between Great Wall and Gordon Auto
Assuming the 90 days trading horizon Great Wall is expected to generate 3.05 times less return on investment than Gordon Auto. But when comparing it to its historical volatility, Great Wall Enterprise is 4.52 times less risky than Gordon Auto. It trades about 0.31 of its potential returns per unit of risk. Gordon Auto Body is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 3,485 in Gordon Auto Body on September 1, 2024 and sell it today you would earn a total of 430.00 from holding Gordon Auto Body or generate 12.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Wall Enterprise vs. Gordon Auto Body
Performance |
| Timeline |
| Great Wall Enterprise |
| Gordon Auto Body |
Great Wall and Gordon Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Wall and Gordon Auto
The main advantage of trading using opposite Great Wall and Gordon Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Wall position performs unexpectedly, Gordon Auto 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 Gordon Auto will offset losses from the drop in Gordon Auto's long position.| Great Wall vs. De Licacy Industrial | Great Wall vs. Wisher Industrial Co | Great Wall vs. Tainan Enterprises Co |
| Gordon Auto vs. Chaintech Technology Corp | Gordon Auto vs. AVerMedia Technologies | Gordon Auto vs. Avision | Gordon Auto vs. Clevo 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 CEOs Directory module to screen CEOs from public companies around the world.
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