Correlation Between Dowlais Group and Great Wall
Can any of the company-specific risk be diversified away by investing in both Dowlais Group 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 Dowlais Group and Great Wall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dowlais Group plc and Great Wall Motor, you can compare the effects of market volatilities on Dowlais Group 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 Dowlais Group with a short position of Great Wall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dowlais Group and Great Wall.
Diversification Opportunities for Dowlais Group and Great Wall
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dowlais and Great is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Dowlais Group plc 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 Dowlais Group 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 Dowlais Group plc 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 Dowlais Group i.e., Dowlais Group and Great Wall go up and down completely randomly.
Pair Corralation between Dowlais Group and Great Wall
Assuming the 90 days horizon Dowlais Group plc is expected to under-perform the Great Wall. But the pink sheet apears to be less risky and, when comparing its historical volatility, Dowlais Group plc is 1.77 times less risky than Great Wall. The pink sheet trades about -0.15 of its potential returns per unit of risk. The Great Wall Motor is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 175.00 in Great Wall Motor on August 28, 2024 and sell it today you would lose (8.00) from holding Great Wall Motor or give up 4.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dowlais Group plc vs. Great Wall Motor
Performance |
| Timeline |
| Dowlais Group plc |
| Great Wall Motor |
Dowlais Group and Great Wall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dowlais Group and Great Wall
The main advantage of trading using opposite Dowlais Group and Great Wall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dowlais Group 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.| Dowlais Group vs. Legacy Education | Dowlais Group vs. NVIDIA | Dowlais Group vs. Apple Inc | Dowlais Group vs. Microsoft |
| 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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