Correlation Between Guangzhou Automobile and Aston Martin
Can any of the company-specific risk be diversified away by investing in both Guangzhou Automobile and Aston Martin 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 Guangzhou Automobile and Aston Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangzhou Automobile Group and Aston Martin Lagonda, you can compare the effects of market volatilities on Guangzhou Automobile and Aston Martin 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 Guangzhou Automobile with a short position of Aston Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Automobile and Aston Martin.
Diversification Opportunities for Guangzhou Automobile and Aston Martin
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Guangzhou and Aston is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Automobile Group and Aston Martin Lagonda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Martin Lagonda and Guangzhou Automobile 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 Guangzhou Automobile Group are associated (or correlated) with Aston Martin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Martin Lagonda has no effect on the direction of Guangzhou Automobile i.e., Guangzhou Automobile and Aston Martin go up and down completely randomly.
Pair Corralation between Guangzhou Automobile and Aston Martin
Assuming the 90 days horizon Guangzhou Automobile Group is expected to generate 2.14 times more return on investment than Aston Martin. However, Guangzhou Automobile is 2.14 times more volatile than Aston Martin Lagonda. It trades about 0.04 of its potential returns per unit of risk. Aston Martin Lagonda is currently generating about -0.06 per unit of risk. If you would invest 38.00 in Guangzhou Automobile Group on August 28, 2024 and sell it today you would earn a total of 2.00 from holding Guangzhou Automobile Group or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 86.6% |
| Values | Daily Returns |
Guangzhou Automobile Group vs. Aston Martin Lagonda
Performance |
| Timeline |
| Guangzhou Automobile |
| Aston Martin Lagonda |
Guangzhou Automobile and Aston Martin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Automobile and Aston Martin
The main advantage of trading using opposite Guangzhou Automobile and Aston Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Automobile position performs unexpectedly, Aston Martin 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 Aston Martin will offset losses from the drop in Aston Martin's long position.| Guangzhou Automobile vs. Great Wall Motor | Guangzhou Automobile vs. Dongfeng Group | Guangzhou Automobile vs. Great Wall Motor | Guangzhou Automobile vs. BAIC Motor |
| Aston Martin vs. Geely Automobile Holdings | Aston Martin vs. Guangzhou Automobile Group | Aston Martin vs. Dowlais Group plc | Aston Martin vs. NFI Group |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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