Correlation Between NVIDIA and Guangzhou Automobile
Can any of the company-specific risk be diversified away by investing in both NVIDIA 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 NVIDIA and Guangzhou Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Guangzhou Automobile Group, you can compare the effects of market volatilities on NVIDIA 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 NVIDIA with a short position of Guangzhou Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Guangzhou Automobile.
Diversification Opportunities for NVIDIA and Guangzhou Automobile
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NVIDIA and Guangzhou is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Guangzhou Automobile Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Automobile and NVIDIA 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 NVIDIA 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 NVIDIA i.e., NVIDIA and Guangzhou Automobile go up and down completely randomly.
Pair Corralation between NVIDIA and Guangzhou Automobile
Given the investment horizon of 90 days NVIDIA is expected to under-perform the Guangzhou Automobile. But the stock apears to be less risky and, when comparing its historical volatility, NVIDIA is 2.32 times less risky than Guangzhou Automobile. The stock trades about -0.05 of its potential returns per unit of risk. The Guangzhou Automobile Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 41.00 in Guangzhou Automobile Group on August 28, 2024 and sell it today you would lose (1.00) from holding Guangzhou Automobile Group or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. Guangzhou Automobile Group
Performance |
| Timeline |
| NVIDIA |
| Guangzhou Automobile |
NVIDIA and Guangzhou Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Guangzhou Automobile
The main advantage of trading using opposite NVIDIA and Guangzhou Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA 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.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Transaction History View history of all your transactions and understand their impact on performance |