Correlation Between Great Wall and First Hydrogen
Can any of the company-specific risk be diversified away by investing in both Great Wall and First Hydrogen 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 First Hydrogen 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 First Hydrogen Corp, you can compare the effects of market volatilities on Great Wall and First Hydrogen 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 First Hydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and First Hydrogen.
Diversification Opportunities for Great Wall and First Hydrogen
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Great and First is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Motor and First Hydrogen Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hydrogen Corp 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 First Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hydrogen Corp has no effect on the direction of Great Wall i.e., Great Wall and First Hydrogen go up and down completely randomly.
Pair Corralation between Great Wall and First Hydrogen
Assuming the 90 days horizon Great Wall Motor is expected to generate 0.94 times more return on investment than First Hydrogen. However, Great Wall Motor is 1.06 times less risky than First Hydrogen. It trades about 0.06 of its potential returns per unit of risk. First Hydrogen Corp is currently generating about -0.08 per unit of risk. If you would invest 112.00 in Great Wall Motor on November 9, 2024 and sell it today you would earn a total of 44.00 from holding Great Wall Motor or generate 39.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 65.06% |
| Values | Daily Returns |
Great Wall Motor vs. First Hydrogen Corp
Performance |
| Timeline |
| Great Wall Motor |
| First Hydrogen Corp |
Great Wall and First Hydrogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Wall and First Hydrogen
The main advantage of trading using opposite Great Wall and First Hydrogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Wall position performs unexpectedly, First Hydrogen 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 First Hydrogen will offset losses from the drop in First Hydrogen'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 |
| First Hydrogen vs. BAIC Motor | First Hydrogen vs. Zapp Electric Vehicles | First Hydrogen vs. Guangzhou Automobile Group | First Hydrogen vs. Phoenix Motor Common |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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