Correlation Between Group 1 and Zhongsheng Group
Can any of the company-specific risk be diversified away by investing in both Group 1 and Zhongsheng Group 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 Group 1 and Zhongsheng Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Group 1 Automotive and Zhongsheng Group Holdings, you can compare the effects of market volatilities on Group 1 and Zhongsheng Group 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 Group 1 with a short position of Zhongsheng Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group 1 and Zhongsheng Group.
Diversification Opportunities for Group 1 and Zhongsheng Group
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Group and Zhongsheng is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Group 1 Automotive and Zhongsheng Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongsheng Group Holdings and Group 1 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 Group 1 Automotive are associated (or correlated) with Zhongsheng Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongsheng Group Holdings has no effect on the direction of Group 1 i.e., Group 1 and Zhongsheng Group go up and down completely randomly.
Pair Corralation between Group 1 and Zhongsheng Group
Considering the 90-day investment horizon Group 1 Automotive is expected to generate 0.55 times more return on investment than Zhongsheng Group. However, Group 1 Automotive is 1.81 times less risky than Zhongsheng Group. It trades about 0.44 of its potential returns per unit of risk. Zhongsheng Group Holdings is currently generating about 0.07 per unit of risk. If you would invest 41,625 in Group 1 Automotive on November 2, 2024 and sell it today you would earn a total of 4,569 from holding Group 1 Automotive or generate 10.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Group 1 Automotive vs. Zhongsheng Group Holdings
Performance |
| Timeline |
| Group 1 Automotive |
| Zhongsheng Group Holdings |
Group 1 and Zhongsheng Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Group 1 and Zhongsheng Group
The main advantage of trading using opposite Group 1 and Zhongsheng Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Group 1 position performs unexpectedly, Zhongsheng Group 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 Zhongsheng Group will offset losses from the drop in Zhongsheng Group's long position.| Group 1 vs. Penske Automotive Group | Group 1 vs. Lithia Motors | Group 1 vs. AutoNation | Group 1 vs. Asbury Automotive Group |
| Zhongsheng Group vs. Carvana Co | Zhongsheng Group vs. Golar LNG Limited | Zhongsheng Group vs. Veeva Systems Class | Zhongsheng Group vs. BRISTOL MYERS SQUIBB 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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