Correlation Between PTRA and BAIC MotorLimited
Can any of the company-specific risk be diversified away by investing in both PTRA and BAIC MotorLimited 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 PTRA and BAIC MotorLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PTRA and BAIC Motor, you can compare the effects of market volatilities on PTRA and BAIC MotorLimited 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 PTRA with a short position of BAIC MotorLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of PTRA and BAIC MotorLimited.
Diversification Opportunities for PTRA and BAIC MotorLimited
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PTRA and BAIC is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding PTRA and BAIC Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAIC MotorLimited and PTRA 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 PTRA are associated (or correlated) with BAIC MotorLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAIC MotorLimited has no effect on the direction of PTRA i.e., PTRA and BAIC MotorLimited go up and down completely randomly.
Pair Corralation between PTRA and BAIC MotorLimited
Given the investment horizon of 90 days PTRA is expected to under-perform the BAIC MotorLimited. In addition to that, PTRA is 2.4 times more volatile than BAIC Motor. It trades about -0.04 of its total potential returns per unit of risk. BAIC Motor is currently generating about 0.04 per unit of volatility. If you would invest 22.00 in BAIC Motor on August 31, 2024 and sell it today you would earn a total of 8.00 from holding BAIC Motor or generate 36.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 28.51% |
| Values | Daily Returns |
PTRA vs. BAIC Motor
Performance |
| Timeline |
| PTRA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| BAIC MotorLimited |
PTRA and BAIC MotorLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PTRA and BAIC MotorLimited
The main advantage of trading using opposite PTRA and BAIC MotorLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PTRA position performs unexpectedly, BAIC MotorLimited 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 BAIC MotorLimited will offset losses from the drop in BAIC MotorLimited's long position.| PTRA vs. Faraday Future Intelligent | PTRA vs. Mullen Automotive | PTRA vs. Canoo Inc | PTRA vs. Hyzon Motors |
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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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