Correlation Between Aston Martin and Guangzhou Automobile
Can any of the company-specific risk be diversified away by investing in both Aston Martin and Guangzhou Automobile 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 Guangzhou Automobile 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 Guangzhou Automobile Group, you can compare the effects of market volatilities on Aston Martin 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 Aston Martin with a short position of Guangzhou Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aston Martin and Guangzhou Automobile.
Diversification Opportunities for Aston Martin and Guangzhou Automobile
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Aston and Guangzhou is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Aston Martin Lagonda and Guangzhou Automobile Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Automobile 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 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 Aston Martin i.e., Aston Martin and Guangzhou Automobile go up and down completely randomly.
Pair Corralation between Aston Martin and Guangzhou Automobile
Assuming the 90 days horizon Aston Martin Lagonda is expected to generate 0.57 times more return on investment than Guangzhou Automobile. However, Aston Martin Lagonda is 1.76 times less risky than Guangzhou Automobile. It trades about 0.06 of its potential returns per unit of risk. Guangzhou Automobile Group is currently generating about 0.01 per unit of risk. If you would invest 134.00 in Aston Martin Lagonda on August 28, 2024 and sell it today you would earn a total of 4.00 from holding Aston Martin Lagonda or generate 2.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aston Martin Lagonda vs. Guangzhou Automobile Group
Performance |
| Timeline |
| Aston Martin Lagonda |
| Guangzhou Automobile |
Aston Martin and Guangzhou Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aston Martin and Guangzhou Automobile
The main advantage of trading using opposite Aston Martin and Guangzhou Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aston Martin 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.| Aston Martin vs. Geely Automobile Holdings | Aston Martin vs. Guangzhou Automobile Group | Aston Martin vs. Dowlais Group plc | Aston Martin vs. NFI Group |
| Guangzhou Automobile vs. Great Wall Motor | Guangzhou Automobile vs. Dongfeng Group | Guangzhou Automobile vs. Great Wall Motor | Guangzhou Automobile vs. BAIC Motor |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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