Correlation Between Guangzhou Automobile and Phoenix
Can any of the company-specific risk be diversified away by investing in both Guangzhou Automobile and Phoenix 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 Phoenix 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 Phoenix Motor Common, you can compare the effects of market volatilities on Guangzhou Automobile and Phoenix 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 Phoenix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Automobile and Phoenix.
Diversification Opportunities for Guangzhou Automobile and Phoenix
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Guangzhou and Phoenix is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Automobile Group and Phoenix Motor Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Motor Common 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 Phoenix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Motor Common has no effect on the direction of Guangzhou Automobile i.e., Guangzhou Automobile and Phoenix go up and down completely randomly.
Pair Corralation between Guangzhou Automobile and Phoenix
Assuming the 90 days horizon Guangzhou Automobile is expected to generate 9.77 times less return on investment than Phoenix. But when comparing it to its historical volatility, Guangzhou Automobile Group is 2.15 times less risky than Phoenix. It trades about 0.01 of its potential returns per unit of risk. Phoenix Motor Common is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 78.00 in Phoenix Motor Common on August 31, 2024 and sell it today you would lose (44.00) from holding Phoenix Motor Common or give up 56.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 79.95% |
| Values | Daily Returns |
Guangzhou Automobile Group vs. Phoenix Motor Common
Performance |
| Timeline |
| Guangzhou Automobile |
| Phoenix Motor Common |
Guangzhou Automobile and Phoenix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Automobile and Phoenix
The main advantage of trading using opposite Guangzhou Automobile and Phoenix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Automobile position performs unexpectedly, Phoenix 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 Phoenix will offset losses from the drop in Phoenix'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 |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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