Correlation Between Contemporary Amperex and Guangzhou Automobile
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By analyzing existing cross correlation between Contemporary Amperex Technology and Guangzhou Automobile Group, you can compare the effects of market volatilities on Contemporary Amperex 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 Contemporary Amperex with a short position of Guangzhou Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Contemporary Amperex and Guangzhou Automobile.
Diversification Opportunities for Contemporary Amperex and Guangzhou Automobile
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Contemporary and Guangzhou is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Contemporary Amperex Technolog and Guangzhou Automobile Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Automobile and Contemporary Amperex 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 Contemporary Amperex Technology 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 Contemporary Amperex i.e., Contemporary Amperex and Guangzhou Automobile go up and down completely randomly.
Pair Corralation between Contemporary Amperex and Guangzhou Automobile
Assuming the 90 days trading horizon Contemporary Amperex Technology is expected to generate 1.57 times more return on investment than Guangzhou Automobile. However, Contemporary Amperex is 1.57 times more volatile than Guangzhou Automobile Group. It trades about 0.03 of its potential returns per unit of risk. Guangzhou Automobile Group is currently generating about -0.03 per unit of risk. If you would invest 21,022 in Contemporary Amperex Technology on August 24, 2024 and sell it today you would earn a total of 4,888 from holding Contemporary Amperex Technology or generate 23.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Contemporary Amperex Technolog vs. Guangzhou Automobile Group
Performance |
| Timeline |
| Contemporary Amperex |
| Guangzhou Automobile |
Contemporary Amperex and Guangzhou Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Contemporary Amperex and Guangzhou Automobile
The main advantage of trading using opposite Contemporary Amperex and Guangzhou Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Contemporary Amperex 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 Contemporary Amperex Technology 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.
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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