Correlation Between Aston Martin and BAIC MotorLimited
Can any of the company-specific risk be diversified away by investing in both Aston Martin and BAIC MotorLimited 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 Aston Martin and BAIC MotorLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aston Martin Lagonda and BAIC Motor, you can compare the effects of market volatilities on Aston Martin and BAIC MotorLimited 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 Aston Martin with a short position of BAIC MotorLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aston Martin and BAIC MotorLimited.
Diversification Opportunities for Aston Martin and BAIC MotorLimited
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aston and BAIC is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Aston Martin Lagonda and BAIC Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAIC MotorLimited and Aston Martin 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 Aston Martin Lagonda are associated (or correlated) with BAIC MotorLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAIC MotorLimited has no effect on the direction of Aston Martin i.e., Aston Martin and BAIC MotorLimited go up and down completely randomly.
Pair Corralation between Aston Martin and BAIC MotorLimited
Assuming the 90 days horizon Aston Martin Lagonda is expected to under-perform the BAIC MotorLimited. In addition to that, Aston Martin is 1.44 times more volatile than BAIC Motor. It trades about -0.03 of its total potential returns per unit of risk. BAIC Motor is currently generating about 0.02 per unit of volatility. If you would invest 29.00 in BAIC Motor on September 2, 2024 and sell it today you would earn a total of 1.00 from holding BAIC Motor or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aston Martin Lagonda vs. BAIC Motor
Performance |
| Timeline |
| Aston Martin Lagonda |
| BAIC MotorLimited |
Aston Martin and BAIC MotorLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aston Martin and BAIC MotorLimited
The main advantage of trading using opposite Aston Martin and BAIC MotorLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aston Martin position performs unexpectedly, BAIC MotorLimited 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 BAIC MotorLimited will offset losses from the drop in BAIC MotorLimited's long position.| Aston Martin vs. Polestar Automotive Holding | Aston Martin vs. Geely Automobile Holdings | Aston Martin vs. Mercedes Benz Group AG | Aston Martin vs. Porsche Automobile Holding |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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