Correlation Between Gordon Auto and Tex Ray
Can any of the company-specific risk be diversified away by investing in both Gordon Auto and Tex Ray 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 Gordon Auto and Tex Ray into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gordon Auto Body and Tex Ray Industrial Co, you can compare the effects of market volatilities on Gordon Auto and Tex Ray 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 Gordon Auto with a short position of Tex Ray. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gordon Auto and Tex Ray.
Diversification Opportunities for Gordon Auto and Tex Ray
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gordon and Tex is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Gordon Auto Body and Tex Ray Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tex Ray Industrial and Gordon Auto 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 Gordon Auto Body are associated (or correlated) with Tex Ray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tex Ray Industrial has no effect on the direction of Gordon Auto i.e., Gordon Auto and Tex Ray go up and down completely randomly.
Pair Corralation between Gordon Auto and Tex Ray
Assuming the 90 days trading horizon Gordon Auto Body is expected to generate 1.8 times more return on investment than Tex Ray. However, Gordon Auto is 1.8 times more volatile than Tex Ray Industrial Co. It trades about 0.14 of its potential returns per unit of risk. Tex Ray Industrial Co is currently generating about 0.02 per unit of risk. If you would invest 3,570 in Gordon Auto Body on August 29, 2024 and sell it today you would earn a total of 290.00 from holding Gordon Auto Body or generate 8.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gordon Auto Body vs. Tex Ray Industrial Co
Performance |
| Timeline |
| Gordon Auto Body |
| Tex Ray Industrial |
Gordon Auto and Tex Ray Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gordon Auto and Tex Ray
The main advantage of trading using opposite Gordon Auto and Tex Ray positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gordon Auto position performs unexpectedly, Tex Ray 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 Tex Ray will offset losses from the drop in Tex Ray's long position.| Gordon Auto vs. Yulon Finance Corp | Gordon Auto vs. Taiwan Secom Co | Gordon Auto vs. Great Wall Enterprise |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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