Correlation Between Great Wall and Mitsubishi Motors
Can any of the company-specific risk be diversified away by investing in both Great Wall and Mitsubishi Motors 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 Mitsubishi Motors 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 Mitsubishi Motors Corp, you can compare the effects of market volatilities on Great Wall and Mitsubishi Motors 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 Mitsubishi Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and Mitsubishi Motors.
Diversification Opportunities for Great Wall and Mitsubishi Motors
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Great and Mitsubishi is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Motor and Mitsubishi Motors Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Motors 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 Mitsubishi Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Motors Corp has no effect on the direction of Great Wall i.e., Great Wall and Mitsubishi Motors go up and down completely randomly.
Pair Corralation between Great Wall and Mitsubishi Motors
Assuming the 90 days horizon Great Wall Motor is expected to generate 0.59 times more return on investment than Mitsubishi Motors. However, Great Wall Motor is 1.71 times less risky than Mitsubishi Motors. It trades about -0.1 of its potential returns per unit of risk. Mitsubishi Motors Corp is currently generating about -0.27 per unit of risk. If you would invest 165.00 in Great Wall Motor on November 9, 2024 and sell it today you would lose (9.00) from holding Great Wall Motor or give up 5.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Wall Motor vs. Mitsubishi Motors Corp
Performance |
| Timeline |
| Great Wall Motor |
| Mitsubishi Motors Corp |
Great Wall and Mitsubishi Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Wall and Mitsubishi Motors
The main advantage of trading using opposite Great Wall and Mitsubishi Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Wall position performs unexpectedly, Mitsubishi Motors 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 Mitsubishi Motors will offset losses from the drop in Mitsubishi Motors' 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 |
| Mitsubishi Motors vs. Great Wall Motor | Mitsubishi Motors vs. Geely Automobile Holdings | Mitsubishi Motors vs. Hyundai Motor Co | Mitsubishi Motors vs. Volkswagen AG 110 |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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