Correlation Between NFI and Guangzhou Automobile
Can any of the company-specific risk be diversified away by investing in both NFI and Guangzhou Automobile 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 NFI and Guangzhou Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NFI Group and Guangzhou Automobile Group, you can compare the effects of market volatilities on NFI and Guangzhou Automobile 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 NFI with a short position of Guangzhou Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of NFI and Guangzhou Automobile.
Diversification Opportunities for NFI and Guangzhou Automobile
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NFI and Guangzhou is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding NFI Group and Guangzhou Automobile Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Automobile and NFI 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 NFI Group are associated (or correlated) with Guangzhou Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Automobile has no effect on the direction of NFI i.e., NFI and Guangzhou Automobile go up and down completely randomly.
Pair Corralation between NFI and Guangzhou Automobile
Assuming the 90 days horizon NFI Group is expected to under-perform the Guangzhou Automobile. But the pink sheet apears to be less risky and, when comparing its historical volatility, NFI Group is 2.89 times less risky than Guangzhou Automobile. The pink sheet trades about -0.31 of its potential returns per unit of risk. The Guangzhou Automobile Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 40.00 in Guangzhou Automobile Group on August 24, 2024 and sell it today you would earn a total of 4.00 from holding Guangzhou Automobile Group or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NFI Group vs. Guangzhou Automobile Group
Performance |
| Timeline |
| NFI Group |
| Guangzhou Automobile |
NFI and Guangzhou Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NFI and Guangzhou Automobile
The main advantage of trading using opposite NFI and Guangzhou Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NFI position performs unexpectedly, Guangzhou Automobile 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 Guangzhou Automobile will offset losses from the drop in Guangzhou Automobile's long position.| NFI vs. Zapp Electric Vehicles | NFI vs. Guangzhou Automobile Group | NFI vs. Exor NV | NFI vs. Aston Martin Lagonda |
| Guangzhou Automobile vs. Great Wall Motor | Guangzhou Automobile vs. Dongfeng Group | Guangzhou Automobile vs. Great Wall Motor | Guangzhou Automobile vs. BAIC Motor |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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