Correlation Between Great Wall and Polestar Automotive
Can any of the company-specific risk be diversified away by investing in both Great Wall and Polestar Automotive 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 Polestar Automotive 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 Polestar Automotive Holding, you can compare the effects of market volatilities on Great Wall and Polestar Automotive 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 Polestar Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and Polestar Automotive.
Diversification Opportunities for Great Wall and Polestar Automotive
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Great and Polestar is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Motor and Polestar Automotive Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polestar Automotive 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 Polestar Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polestar Automotive has no effect on the direction of Great Wall i.e., Great Wall and Polestar Automotive go up and down completely randomly.
Pair Corralation between Great Wall and Polestar Automotive
Assuming the 90 days horizon Great Wall Motor is expected to under-perform the Polestar Automotive. But the pink sheet apears to be less risky and, when comparing its historical volatility, Great Wall Motor is 3.57 times less risky than Polestar Automotive. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Polestar Automotive Holding is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 21.00 in Polestar Automotive Holding on November 1, 2024 and sell it today you would earn a total of 0.90 from holding Polestar Automotive Holding or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Wall Motor vs. Polestar Automotive Holding
Performance |
| Timeline |
| Great Wall Motor |
| Polestar Automotive |
Great Wall and Polestar Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Wall and Polestar Automotive
The main advantage of trading using opposite Great Wall and Polestar Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Wall position performs unexpectedly, Polestar Automotive 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 Polestar Automotive will offset losses from the drop in Polestar Automotive'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 |
| Polestar Automotive vs. Lucid Group | Polestar Automotive vs. Canoo Inc | Polestar Automotive vs. Rivian Automotive | Polestar Automotive vs. Aston Martin Lagonda |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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