Correlation Between Guangzhou Automobile and Eastern Communications
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By analyzing existing cross correlation between Guangzhou Automobile Group and Eastern Communications Co, you can compare the effects of market volatilities on Guangzhou Automobile and Eastern Communications 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 Eastern Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Automobile and Eastern Communications.
Diversification Opportunities for Guangzhou Automobile and Eastern Communications
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Guangzhou and Eastern is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Automobile Group and Eastern Communications Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Communications 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 Eastern Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Communications has no effect on the direction of Guangzhou Automobile i.e., Guangzhou Automobile and Eastern Communications go up and down completely randomly.
Pair Corralation between Guangzhou Automobile and Eastern Communications
Assuming the 90 days trading horizon Guangzhou Automobile Group is expected to generate 0.99 times more return on investment than Eastern Communications. However, Guangzhou Automobile Group is 1.01 times less risky than Eastern Communications. It trades about 0.19 of its potential returns per unit of risk. Eastern Communications Co is currently generating about 0.05 per unit of risk. If you would invest 799.00 in Guangzhou Automobile Group on September 1, 2024 and sell it today you would earn a total of 85.00 from holding Guangzhou Automobile Group or generate 10.64% 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. Eastern Communications Co
Performance |
| Timeline |
| Guangzhou Automobile |
| Eastern Communications |
Guangzhou Automobile and Eastern Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Automobile and Eastern Communications
The main advantage of trading using opposite Guangzhou Automobile and Eastern Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Automobile position performs unexpectedly, Eastern Communications 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 Eastern Communications will offset losses from the drop in Eastern Communications' long position.| Guangzhou Automobile vs. Anhui Huaren Health | Guangzhou Automobile vs. Shanghai Broadband Technology | Guangzhou Automobile vs. Healthcare Co | Guangzhou Automobile vs. Dezhan HealthCare Co |
| Eastern Communications vs. Wuxi Chemical Equipment | Eastern Communications vs. Yangmei Chemical Co | Eastern Communications vs. Lander Sports Development | Eastern Communications vs. Jiangsu Jinling Sports |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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