Correlation Between Guangzhou Automobile and Porsche Automobil
Can any of the company-specific risk be diversified away by investing in both Guangzhou Automobile and Porsche Automobil 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 Porsche Automobil 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 Porsche Automobil Holding, you can compare the effects of market volatilities on Guangzhou Automobile and Porsche Automobil 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 Porsche Automobil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Automobile and Porsche Automobil.
Diversification Opportunities for Guangzhou Automobile and Porsche Automobil
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guangzhou and Porsche is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Automobile Group and Porsche Automobil Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Porsche Automobil Holding 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 Porsche Automobil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Porsche Automobil Holding has no effect on the direction of Guangzhou Automobile i.e., Guangzhou Automobile and Porsche Automobil go up and down completely randomly.
Pair Corralation between Guangzhou Automobile and Porsche Automobil
Assuming the 90 days horizon Guangzhou Automobile Group is expected to generate 2.99 times more return on investment than Porsche Automobil. However, Guangzhou Automobile is 2.99 times more volatile than Porsche Automobil Holding. It trades about 0.02 of its potential returns per unit of risk. Porsche Automobil Holding is currently generating about -0.06 per unit of risk. If you would invest 56.00 in Guangzhou Automobile Group on September 4, 2024 and sell it today you would lose (10.00) from holding Guangzhou Automobile Group or give up 17.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 80.38% |
| Values | Daily Returns |
Guangzhou Automobile Group vs. Porsche Automobil Holding
Performance |
| Timeline |
| Guangzhou Automobile |
| Porsche Automobil Holding |
Guangzhou Automobile and Porsche Automobil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Automobile and Porsche Automobil
The main advantage of trading using opposite Guangzhou Automobile and Porsche Automobil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Automobile position performs unexpectedly, Porsche Automobil 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 Porsche Automobil will offset losses from the drop in Porsche Automobil's long position.| Guangzhou Automobile vs. Porsche Automobil Holding | Guangzhou Automobile vs. Porsche Automobile Holding | Guangzhou Automobile vs. Volkswagen AG 110 | Guangzhou Automobile vs. Bayerische Motoren Werke |
| Porsche Automobil vs. Volkswagen AG Pref | Porsche Automobil vs. Volkswagen AG 110 | Porsche Automobil vs. Ferrari NV | Porsche Automobil vs. Bayerische Motoren Werke |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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