Correlation Between Guangzhou Automobile and First Hydrogen
Can any of the company-specific risk be diversified away by investing in both Guangzhou Automobile and First Hydrogen 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 First Hydrogen 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 First Hydrogen Corp, you can compare the effects of market volatilities on Guangzhou Automobile and First Hydrogen 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 First Hydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Automobile and First Hydrogen.
Diversification Opportunities for Guangzhou Automobile and First Hydrogen
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Guangzhou and First is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Automobile Group and First Hydrogen Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hydrogen Corp 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 First Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hydrogen Corp has no effect on the direction of Guangzhou Automobile i.e., Guangzhou Automobile and First Hydrogen go up and down completely randomly.
Pair Corralation between Guangzhou Automobile and First Hydrogen
Assuming the 90 days horizon Guangzhou Automobile Group is expected to generate 1.25 times more return on investment than First Hydrogen. However, Guangzhou Automobile is 1.25 times more volatile than First Hydrogen Corp. It trades about -0.02 of its potential returns per unit of risk. First Hydrogen Corp is currently generating about -0.24 per unit of risk. If you would invest 37.00 in Guangzhou Automobile Group on August 31, 2024 and sell it today you would lose (2.00) from holding Guangzhou Automobile Group or give up 5.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou Automobile Group vs. First Hydrogen Corp
Performance |
| Timeline |
| Guangzhou Automobile |
| First Hydrogen Corp |
Guangzhou Automobile and First Hydrogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Automobile and First Hydrogen
The main advantage of trading using opposite Guangzhou Automobile and First Hydrogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Automobile position performs unexpectedly, First Hydrogen 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 First Hydrogen will offset losses from the drop in First Hydrogen's long position.| Guangzhou Automobile vs. Volkswagen AG 110 | Guangzhou Automobile vs. Stellantis NV | Guangzhou Automobile vs. Toyota Motor | Guangzhou Automobile vs. Honda Motor Co |
| First Hydrogen vs. BAIC Motor | First Hydrogen vs. Zapp Electric Vehicles | First Hydrogen vs. Guangzhou Automobile Group | First Hydrogen vs. Phoenix Motor Common |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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