Correlation Between Jointo Energy and Guangzhou Automobile

Can any of the company-specific risk be diversified away by investing in both Jointo Energy 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 Jointo Energy and Guangzhou Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jointo Energy Investment and Guangzhou Automobile Group, you can compare the effects of market volatilities on Jointo Energy 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 Jointo Energy with a short position of Guangzhou Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jointo Energy and Guangzhou Automobile.

Diversification Opportunities for Jointo Energy and Guangzhou Automobile

0.53

Correlation Coefficient

Jointo Energy  Guangzhou Automobile

Very weak diversification

The 3 months correlation between Jointo and Guangzhou is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Jointo Energy Investment and Guangzhou Automobile Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Automobile and Jointo Energy 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 Jointo Energy Investment 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 Jointo Energy i.e., Jointo Energy and Guangzhou Automobile go up and down completely randomly.

Pair Corralation between Jointo Energy and Guangzhou Automobile

Assuming the 90 days trading horizon Jointo Energy Investment is expected to generate 0.83 times more return on investment than Guangzhou Automobile. However, Jointo Energy Investment is 1.2 times less risky than Guangzhou Automobile. It trades about 0.16 of its potential returns per unit of risk. Guangzhou Automobile Group is currently generating about -0.01 per unit of risk. If you would invest  521.00  in Jointo Energy Investment on December 2, 2024 and sell it today you would earn a total of  21.00  from holding Jointo Energy Investment or generate 4.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Jointo Energy Investment  vs.  Guangzhou Automobile Group

Jointo Energy Investment

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jointo Energy Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jointo Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Guangzhou Automobile

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guangzhou Automobile Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Jointo Energy and Guangzhou Automobile

The main advantage of trading using opposite Jointo Energy and Guangzhou Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jointo Energy 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.

The idea behind Jointo Energy Investment and Guangzhou Automobile Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.