Correlation Between BAIC MotorLimited and Great Wall
Can any of the company-specific risk be diversified away by investing in both BAIC MotorLimited and Great Wall 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 BAIC MotorLimited and Great Wall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BAIC Motor and Great Wall Motor, you can compare the effects of market volatilities on BAIC MotorLimited and Great Wall 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 BAIC MotorLimited with a short position of Great Wall. Check out your portfolio center. Please also check ongoing floating volatility patterns of BAIC MotorLimited and Great Wall.
Diversification Opportunities for BAIC MotorLimited and Great Wall
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BAIC and Great is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding BAIC Motor and Great Wall Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Wall Motor and BAIC MotorLimited 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 BAIC Motor are associated (or correlated) with Great Wall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Wall Motor has no effect on the direction of BAIC MotorLimited i.e., BAIC MotorLimited and Great Wall go up and down completely randomly.
Pair Corralation between BAIC MotorLimited and Great Wall
Assuming the 90 days horizon BAIC MotorLimited is expected to generate 2.28 times less return on investment than Great Wall. But when comparing it to its historical volatility, BAIC Motor is 1.16 times less risky than Great Wall. It trades about 0.05 of its potential returns per unit of risk. Great Wall Motor is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 99.00 in Great Wall Motor on August 28, 2024 and sell it today you would earn a total of 68.00 from holding Great Wall Motor or generate 68.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 82.69% |
| Values | Daily Returns |
BAIC Motor vs. Great Wall Motor
Performance |
| Timeline |
| BAIC MotorLimited |
| Great Wall Motor |
BAIC MotorLimited and Great Wall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BAIC MotorLimited and Great Wall
The main advantage of trading using opposite BAIC MotorLimited and Great Wall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BAIC MotorLimited position performs unexpectedly, Great Wall 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 Great Wall will offset losses from the drop in Great Wall's long position.| BAIC MotorLimited vs. Zapp Electric Vehicles | BAIC MotorLimited vs. First Hydrogen Corp | BAIC MotorLimited vs. Guangzhou Automobile Group | BAIC MotorLimited vs. Phoenix Motor Common |
| Great Wall vs. Mitsubishi Motors Corp | Great Wall vs. Geely Automobile Holdings | Great Wall vs. Hyundai Motor Co | Great Wall vs. Volkswagen AG 110 |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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