Correlation Between Guangzhou Automobile and City Development
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By analyzing existing cross correlation between Guangzhou Automobile Group and City Development Environment, you can compare the effects of market volatilities on Guangzhou Automobile and City Development 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 Guangzhou Automobile with a short position of City Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Automobile and City Development.
Diversification Opportunities for Guangzhou Automobile and City Development
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Guangzhou and City is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Automobile Group and City Development Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Development Env and Guangzhou 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 Guangzhou Automobile Group are associated (or correlated) with City Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Development Env has no effect on the direction of Guangzhou Automobile i.e., Guangzhou Automobile and City Development go up and down completely randomly.
Pair Corralation between Guangzhou Automobile and City Development
Assuming the 90 days trading horizon Guangzhou Automobile Group is expected to under-perform the City Development. But the stock apears to be less risky and, when comparing its historical volatility, Guangzhou Automobile Group is 1.15 times less risky than City Development. The stock trades about -0.01 of its potential returns per unit of risk. The City Development Environment is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 916.00 in City Development Environment on September 12, 2024 and sell it today you would earn a total of 452.00 from holding City Development Environment or generate 49.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou Automobile Group vs. City Development Environment
Performance |
| Timeline |
| Guangzhou Automobile |
| City Development Env |
Guangzhou Automobile and City Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Automobile and City Development
The main advantage of trading using opposite Guangzhou Automobile and City Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Automobile position performs unexpectedly, City Development 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 City Development will offset losses from the drop in City Development's long position.| Guangzhou Automobile vs. Lutian Machinery Co | Guangzhou Automobile vs. PetroChina Co Ltd | Guangzhou Automobile vs. Bank of China | Guangzhou Automobile vs. Gansu Jiu Steel |
| City Development vs. Zijin Mining Group | City Development vs. Wanhua Chemical Group | City Development vs. Baoshan Iron Steel | City Development vs. Rongsheng Petrochemical 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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