Correlation Between Eastern Communications and Guangzhou Automobile
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By analyzing existing cross correlation between Eastern Communications Co and Guangzhou Automobile Group, you can compare the effects of market volatilities on Eastern Communications 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 Eastern Communications with a short position of Guangzhou Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Communications and Guangzhou Automobile.
Diversification Opportunities for Eastern Communications and Guangzhou Automobile
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eastern and Guangzhou is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Communications Co and Guangzhou Automobile Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Automobile and Eastern Communications 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 Eastern Communications Co 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 Eastern Communications i.e., Eastern Communications and Guangzhou Automobile go up and down completely randomly.
Pair Corralation between Eastern Communications and Guangzhou Automobile
Assuming the 90 days trading horizon Eastern Communications is expected to generate 3.54 times less return on investment than Guangzhou Automobile. In addition to that, Eastern Communications is 1.01 times more volatile than Guangzhou Automobile Group. It trades about 0.05 of its total potential returns per unit of risk. Guangzhou Automobile Group is currently generating about 0.19 per unit of volatility. 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 |
Eastern Communications Co vs. Guangzhou Automobile Group
Performance |
| Timeline |
| Eastern Communications |
| Guangzhou Automobile |
Eastern Communications and Guangzhou Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Communications and Guangzhou Automobile
The main advantage of trading using opposite Eastern Communications and Guangzhou Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Communications 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.| Eastern Communications vs. Wuxi Chemical Equipment | Eastern Communications vs. Yangmei Chemical Co | Eastern Communications vs. Lander Sports Development | Eastern Communications vs. Jiangsu Jinling Sports |
| Guangzhou Automobile vs. Anhui Huaren Health | Guangzhou Automobile vs. Shanghai Broadband Technology | Guangzhou Automobile vs. Healthcare Co | Guangzhou Automobile vs. Dezhan HealthCare 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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