Correlation Between Volkswagen and Dongfeng
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Dongfeng 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 Volkswagen and Dongfeng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG 110 and Dongfeng Group, you can compare the effects of market volatilities on Volkswagen and Dongfeng 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 Volkswagen with a short position of Dongfeng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Dongfeng.
Diversification Opportunities for Volkswagen and Dongfeng
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Volkswagen and Dongfeng is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG 110 and Dongfeng Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongfeng Group and Volkswagen 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 Volkswagen AG 110 are associated (or correlated) with Dongfeng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongfeng Group has no effect on the direction of Volkswagen i.e., Volkswagen and Dongfeng go up and down completely randomly.
Pair Corralation between Volkswagen and Dongfeng
Assuming the 90 days horizon Volkswagen AG 110 is expected to under-perform the Dongfeng. But the pink sheet apears to be less risky and, when comparing its historical volatility, Volkswagen AG 110 is 4.46 times less risky than Dongfeng. The pink sheet trades about -0.35 of its potential returns per unit of risk. The Dongfeng Group is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 30.00 in Dongfeng Group on August 31, 2024 and sell it today you would earn a total of 16.00 from holding Dongfeng Group or generate 53.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG 110 vs. Dongfeng Group
Performance |
| Timeline |
| Volkswagen AG 110 |
| Dongfeng Group |
Volkswagen and Dongfeng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Dongfeng
The main advantage of trading using opposite Volkswagen and Dongfeng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Dongfeng 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 Dongfeng will offset losses from the drop in Dongfeng's long position.| Volkswagen vs. Porsche Automobile Holding | Volkswagen vs. Ferrari NV | Volkswagen vs. Toyota Motor | Volkswagen vs. General Motors |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |