Correlation Between New China and Guangzhou Automobile
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By analyzing existing cross correlation between New China Life and Guangzhou Automobile Group, you can compare the effects of market volatilities on New China 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 New China with a short position of Guangzhou Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of New China and Guangzhou Automobile.
Diversification Opportunities for New China and Guangzhou Automobile
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between New and Guangzhou is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding New China Life and Guangzhou Automobile Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Automobile and New China 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 New China Life 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 New China i.e., New China and Guangzhou Automobile go up and down completely randomly.
Pair Corralation between New China and Guangzhou Automobile
Assuming the 90 days trading horizon New China Life is expected to generate 1.32 times more return on investment than Guangzhou Automobile. However, New China is 1.32 times more volatile than Guangzhou Automobile Group. It trades about 0.04 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 3,101 in New China Life on October 15, 2024 and sell it today you would earn a total of 1,400 from holding New China Life or generate 45.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New China Life vs. Guangzhou Automobile Group
Performance |
| Timeline |
| New China Life |
| Guangzhou Automobile |
New China and Guangzhou Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New China and Guangzhou Automobile
The main advantage of trading using opposite New China and Guangzhou Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New China 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.| New China vs. Suzhou Douson Drilling | New China vs. GRG Banking Equipment | New China vs. Agricultural Bank of | New China vs. Industrial Bank Co |
| Guangzhou Automobile vs. Jinsanjiang Silicon Material | Guangzhou Automobile vs. Kangxin New Materials | Guangzhou Automobile vs. Western Metal Materials | Guangzhou Automobile vs. Cangzhou Mingzhu Plastic |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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