Correlation Between Depo Auto and Gordon Auto
Can any of the company-specific risk be diversified away by investing in both Depo Auto and Gordon Auto 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 Depo Auto and Gordon Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Depo Auto Parts and Gordon Auto Body, you can compare the effects of market volatilities on Depo Auto and Gordon Auto 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 Depo Auto with a short position of Gordon Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Depo Auto and Gordon Auto.
Diversification Opportunities for Depo Auto and Gordon Auto
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Depo and Gordon is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Depo Auto Parts and Gordon Auto Body in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gordon Auto Body and Depo Auto 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 Depo Auto Parts are associated (or correlated) with Gordon Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gordon Auto Body has no effect on the direction of Depo Auto i.e., Depo Auto and Gordon Auto go up and down completely randomly.
Pair Corralation between Depo Auto and Gordon Auto
Assuming the 90 days trading horizon Depo Auto Parts is expected to generate 0.75 times more return on investment than Gordon Auto. However, Depo Auto Parts is 1.34 times less risky than Gordon Auto. It trades about -0.03 of its potential returns per unit of risk. Gordon Auto Body is currently generating about -0.03 per unit of risk. If you would invest 21,950 in Depo Auto Parts on October 30, 2024 and sell it today you would lose (400.00) from holding Depo Auto Parts or give up 1.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Depo Auto Parts vs. Gordon Auto Body
Performance |
| Timeline |
| Depo Auto Parts |
| Gordon Auto Body |
Depo Auto and Gordon Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Depo Auto and Gordon Auto
The main advantage of trading using opposite Depo Auto and Gordon Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Depo Auto position performs unexpectedly, Gordon Auto 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 Gordon Auto will offset losses from the drop in Gordon Auto's long position.| Depo Auto vs. Gordon Auto Body | Depo Auto vs. Nien Hsing Textile | Depo Auto vs. Sincere Navigation Corp | Depo Auto vs. Tong Tai Machine Tool |
| Gordon Auto vs. Kaulin Mfg | Gordon Auto vs. Tex Ray Industrial Co | Gordon Auto vs. De Licacy Industrial | Gordon Auto vs. Kwong Fong Industries |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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