Correlation Between Great Wall and Subaru Corp
Can any of the company-specific risk be diversified away by investing in both Great Wall and Subaru Corp 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 Subaru Corp 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 Subaru Corp ADR, you can compare the effects of market volatilities on Great Wall and Subaru Corp 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 Subaru Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and Subaru Corp.
Diversification Opportunities for Great Wall and Subaru Corp
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Great and Subaru is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Motor and Subaru Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Subaru Corp ADR 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 Subaru Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Subaru Corp ADR has no effect on the direction of Great Wall i.e., Great Wall and Subaru Corp go up and down completely randomly.
Pair Corralation between Great Wall and Subaru Corp
Assuming the 90 days horizon Great Wall Motor is expected to generate 2.08 times more return on investment than Subaru Corp. However, Great Wall is 2.08 times more volatile than Subaru Corp ADR. It trades about 0.04 of its potential returns per unit of risk. Subaru Corp ADR is currently generating about -0.09 per unit of risk. If you would invest 144.00 in Great Wall Motor on September 3, 2024 and sell it today you would earn a total of 20.00 from holding Great Wall Motor or generate 13.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.15% |
| Values | Daily Returns |
Great Wall Motor vs. Subaru Corp ADR
Performance |
| Timeline |
| Great Wall Motor |
| Subaru Corp ADR |
Great Wall and Subaru Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Wall and Subaru Corp
The main advantage of trading using opposite Great Wall and Subaru Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Wall position performs unexpectedly, Subaru Corp 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 Subaru Corp will offset losses from the drop in Subaru Corp'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 |
| Subaru Corp vs. Mazda Motor Corp | Subaru Corp vs. Subaru Corp | Subaru Corp vs. Bayerische Motoren Werke | Subaru Corp vs. Bridgestone Corp ADR |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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