Correlation Between Great Wall and Dowlais Group
Can any of the company-specific risk be diversified away by investing in both Great Wall and Dowlais 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 Great Wall and Dowlais Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Wall Motor and Dowlais Group plc, you can compare the effects of market volatilities on Great Wall and Dowlais 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 Great Wall with a short position of Dowlais Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and Dowlais Group.
Diversification Opportunities for Great Wall and Dowlais Group
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Great and Dowlais is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Motor and Dowlais Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dowlais Group plc and Great Wall 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 Great Wall Motor are associated (or correlated) with Dowlais Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dowlais Group plc has no effect on the direction of Great Wall i.e., Great Wall and Dowlais Group go up and down completely randomly.
Pair Corralation between Great Wall and Dowlais Group
Assuming the 90 days horizon Great Wall Motor is expected to generate 1.77 times more return on investment than Dowlais Group. However, Great Wall is 1.77 times more volatile than Dowlais Group plc. It trades about -0.04 of its potential returns per unit of risk. Dowlais Group plc is currently generating about -0.15 per unit of risk. If you would invest 175.00 in Great Wall Motor on August 28, 2024 and sell it today you would lose (8.00) from holding Great Wall Motor or give up 4.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Wall Motor vs. Dowlais Group plc
Performance |
| Timeline |
| Great Wall Motor |
| Dowlais Group plc |
Great Wall and Dowlais Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Wall and Dowlais Group
The main advantage of trading using opposite Great Wall and Dowlais Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Wall position performs unexpectedly, Dowlais 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 Dowlais Group will offset losses from the drop in Dowlais Group's long position.| Great Wall vs. Mitsubishi Motors Corp | Great Wall vs. Geely Automobile Holdings | Great Wall vs. Hyundai Motor Co | Great Wall vs. Volkswagen AG 110 |
| Dowlais Group vs. Legacy Education | Dowlais Group vs. NVIDIA | Dowlais Group vs. Apple Inc | Dowlais Group vs. Microsoft |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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