Correlation Between Zhongsheng Group and Penske Automotive
Can any of the company-specific risk be diversified away by investing in both Zhongsheng Group and Penske Automotive 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 Zhongsheng Group and Penske Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zhongsheng Group Holdings and Penske Automotive Group, you can compare the effects of market volatilities on Zhongsheng Group and Penske Automotive 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 Zhongsheng Group with a short position of Penske Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhongsheng Group and Penske Automotive.
Diversification Opportunities for Zhongsheng Group and Penske Automotive
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zhongsheng and Penske is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Zhongsheng Group Holdings and Penske Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penske Automotive and Zhongsheng Group 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 Zhongsheng Group Holdings are associated (or correlated) with Penske Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penske Automotive has no effect on the direction of Zhongsheng Group i.e., Zhongsheng Group and Penske Automotive go up and down completely randomly.
Pair Corralation between Zhongsheng Group and Penske Automotive
Assuming the 90 days horizon Zhongsheng Group Holdings is expected to under-perform the Penske Automotive. In addition to that, Zhongsheng Group is 2.5 times more volatile than Penske Automotive Group. It trades about -0.14 of its total potential returns per unit of risk. Penske Automotive Group is currently generating about -0.15 per unit of volatility. If you would invest 15,600 in Penske Automotive Group on September 24, 2024 and sell it today you would lose (600.00) from holding Penske Automotive Group or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhongsheng Group Holdings vs. Penske Automotive Group
Performance |
| Timeline |
| Zhongsheng Group Holdings |
| Penske Automotive |
Zhongsheng Group and Penske Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhongsheng Group and Penske Automotive
The main advantage of trading using opposite Zhongsheng Group and Penske Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhongsheng Group position performs unexpectedly, Penske Automotive 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 Penske Automotive will offset losses from the drop in Penske Automotive's long position.| Zhongsheng Group vs. Copart Inc | Zhongsheng Group vs. CarMax Inc | Zhongsheng Group vs. DIeteren Group SA | Zhongsheng Group vs. Penske Automotive Group |
| Penske Automotive vs. Copart Inc | Penske Automotive vs. Zhongsheng Group Holdings | Penske Automotive vs. CarMax Inc | Penske Automotive vs. DIeteren Group SA |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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