Correlation Between Polestar Automotive and Guangzhou Automobile
Can any of the company-specific risk be diversified away by investing in both Polestar Automotive 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 Polestar Automotive and Guangzhou Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polestar Automotive Holding and Guangzhou Automobile Group, you can compare the effects of market volatilities on Polestar Automotive 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 Polestar Automotive with a short position of Guangzhou Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polestar Automotive and Guangzhou Automobile.
Diversification Opportunities for Polestar Automotive and Guangzhou Automobile
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Polestar and Guangzhou is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Polestar Automotive Holding and Guangzhou Automobile Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Automobile and Polestar Automotive 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 Polestar Automotive Holding 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 Polestar Automotive i.e., Polestar Automotive and Guangzhou Automobile go up and down completely randomly.
Pair Corralation between Polestar Automotive and Guangzhou Automobile
Assuming the 90 days horizon Polestar Automotive Holding is expected to under-perform the Guangzhou Automobile. In addition to that, Polestar Automotive is 1.22 times more volatile than Guangzhou Automobile Group. It trades about -0.02 of its total potential returns per unit of risk. Guangzhou Automobile Group is currently generating about 0.01 per unit of volatility. If you would invest 73.00 in Guangzhou Automobile Group on August 24, 2024 and sell it today you would lose (29.00) from holding Guangzhou Automobile Group or give up 39.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.08% |
| Values | Daily Returns |
Polestar Automotive Holding vs. Guangzhou Automobile Group
Performance |
| Timeline |
| Polestar Automotive |
| Guangzhou Automobile |
Polestar Automotive and Guangzhou Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polestar Automotive and Guangzhou Automobile
The main advantage of trading using opposite Polestar Automotive and Guangzhou Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polestar Automotive 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.| Polestar Automotive vs. Lucid Group | Polestar Automotive vs. Canoo Inc | Polestar Automotive vs. Rivian Automotive | Polestar Automotive 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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