Correlation Between Dongfeng Automobile and Guangzhou Fangbang
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By analyzing existing cross correlation between Dongfeng Automobile Co and Guangzhou Fangbang Electronics, you can compare the effects of market volatilities on Dongfeng Automobile and Guangzhou Fangbang 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 Dongfeng Automobile with a short position of Guangzhou Fangbang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongfeng Automobile and Guangzhou Fangbang.
Diversification Opportunities for Dongfeng Automobile and Guangzhou Fangbang
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dongfeng and Guangzhou is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dongfeng Automobile Co and Guangzhou Fangbang Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Fangbang and Dongfeng 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 Dongfeng Automobile Co are associated (or correlated) with Guangzhou Fangbang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Fangbang has no effect on the direction of Dongfeng Automobile i.e., Dongfeng Automobile and Guangzhou Fangbang go up and down completely randomly.
Pair Corralation between Dongfeng Automobile and Guangzhou Fangbang
Assuming the 90 days trading horizon Dongfeng Automobile Co is expected to generate 0.69 times more return on investment than Guangzhou Fangbang. However, Dongfeng Automobile Co is 1.45 times less risky than Guangzhou Fangbang. It trades about 0.04 of its potential returns per unit of risk. Guangzhou Fangbang Electronics is currently generating about 0.02 per unit of risk. If you would invest 589.00 in Dongfeng Automobile Co on October 17, 2024 and sell it today you would earn a total of 97.00 from holding Dongfeng Automobile Co or generate 16.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongfeng Automobile Co vs. Guangzhou Fangbang Electronics
Performance |
| Timeline |
| Dongfeng Automobile |
| Guangzhou Fangbang |
Dongfeng Automobile and Guangzhou Fangbang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongfeng Automobile and Guangzhou Fangbang
The main advantage of trading using opposite Dongfeng Automobile and Guangzhou Fangbang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongfeng Automobile position performs unexpectedly, Guangzhou Fangbang 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 Fangbang will offset losses from the drop in Guangzhou Fangbang's long position.The idea behind Dongfeng Automobile Co and Guangzhou Fangbang Electronics 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.
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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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