Correlation Between Guangzhou Automobile and Stellantis
Can any of the company-specific risk be diversified away by investing in both Guangzhou Automobile and Stellantis 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 Stellantis 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 Stellantis NV, you can compare the effects of market volatilities on Guangzhou Automobile and Stellantis 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 Stellantis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Automobile and Stellantis.
Diversification Opportunities for Guangzhou Automobile and Stellantis
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Guangzhou and Stellantis is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Automobile Group and Stellantis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellantis NV 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 Stellantis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellantis NV has no effect on the direction of Guangzhou Automobile i.e., Guangzhou Automobile and Stellantis go up and down completely randomly.
Pair Corralation between Guangzhou Automobile and Stellantis
Assuming the 90 days horizon Guangzhou Automobile Group is expected to generate 1.64 times more return on investment than Stellantis. However, Guangzhou Automobile is 1.64 times more volatile than Stellantis NV. It trades about 0.05 of its potential returns per unit of risk. Stellantis NV is currently generating about -0.09 per unit of risk. If you would invest 39.00 in Guangzhou Automobile Group on November 29, 2024 and sell it today you would earn a total of 1.00 from holding Guangzhou Automobile Group or generate 2.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Guangzhou Automobile Group vs. Stellantis NV
Performance |
| Timeline |
| Guangzhou Automobile |
| Stellantis NV |
Guangzhou Automobile and Stellantis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Automobile and Stellantis
The main advantage of trading using opposite Guangzhou Automobile and Stellantis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Automobile position performs unexpectedly, Stellantis 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 Stellantis will offset losses from the drop in Stellantis' long position.| Guangzhou Automobile vs. Great Wall Motor | Guangzhou Automobile vs. Dongfeng Group | Guangzhou Automobile vs. Great Wall Motor | Guangzhou Automobile vs. BAIC Motor |
| Stellantis vs. Porsche Automobile Holding | Stellantis vs. Toyota Motor | Stellantis vs. Honda Motor Co | Stellantis vs. General Motors |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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