Correlation Between Automobile and Guyoung Technology

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

By analyzing existing cross correlation between Automobile Pc and Guyoung Technology Co, you can compare the effects of market volatilities on Automobile and Guyoung Technology 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 Automobile with a short position of Guyoung Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and Guyoung Technology.

Diversification Opportunities for Automobile and Guyoung Technology

0.62

Correlation Coefficient

Automobile  Guyoung Technology

Poor diversification

The 3 months correlation between Automobile and Guyoung is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and Guyoung Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guyoung Technology and Automobile 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 Automobile Pc are associated (or correlated) with Guyoung Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guyoung Technology has no effect on the direction of Automobile i.e., Automobile and Guyoung Technology go up and down completely randomly.

Pair Corralation between Automobile and Guyoung Technology

Assuming the 90 days trading horizon Automobile Pc is expected to under-perform the Guyoung Technology. In addition to that, Automobile is 1.56 times more volatile than Guyoung Technology Co. It trades about -0.1 of its total potential returns per unit of risk. Guyoung Technology Co is currently generating about -0.06 per unit of volatility. If you would invest  242,971  in Guyoung Technology Co on October 20, 2024 and sell it today you would lose (22,471) from holding Guyoung Technology Co or give up 9.25% of portfolio value over 90 days.

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

Automobile Pc  vs.  Guyoung Technology Co

Automobile Pc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Automobile Pc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Guyoung Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guyoung Technology Co 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 Automobile and Guyoung Technology

The main advantage of trading using opposite Automobile and Guyoung Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile position performs unexpectedly, Guyoung Technology 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 Guyoung Technology will offset losses from the drop in Guyoung Technology's long position.

The idea behind Automobile Pc and Guyoung Technology Co 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.