Correlation Between China Auto and Cars
Can any of the company-specific risk be diversified away by investing in both China Auto and Cars 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 China Auto and Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Auto Logistics and Cars Inc, you can compare the effects of market volatilities on China Auto and Cars 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 China Auto with a short position of Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Auto and Cars.
Diversification Opportunities for China Auto and Cars
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Cars is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Auto Logistics and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc and China Auto 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 China Auto Logistics are associated (or correlated) with Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of China Auto i.e., China Auto and Cars go up and down completely randomly.
Pair Corralation between China Auto and Cars
If you would invest 994.00 in Cars Inc on January 26, 2024 and sell it today you would earn a total of 692.00 from holding Cars Inc or generate 69.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
China Auto Logistics vs. Cars Inc
Performance |
Timeline |
China Auto Logistics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cars Inc |
China Auto and Cars Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Auto and Cars
The main advantage of trading using opposite China Auto and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Auto position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.China Auto vs. Getty Images Holdings | China Auto vs. Bm Technologies | China Auto vs. Definitive Healthcare Corp | China Auto vs. ServiceNow |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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