Correlation Between Iat Automobile and Guangzhou Jointas

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

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

Diversification Opportunities for Iat Automobile and Guangzhou Jointas

0.86

Correlation Coefficient

Iat Automobile  Guangzhou Jointas

Very poor diversification

The 3 months correlation between Iat and Guangzhou is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Iat Automobile Technology and Guangzhou Jointas Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Jointas and Iat 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 Iat Automobile Technology are associated (or correlated) with Guangzhou Jointas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Jointas has no effect on the direction of Iat Automobile i.e., Iat Automobile and Guangzhou Jointas go up and down completely randomly.

Pair Corralation between Iat Automobile and Guangzhou Jointas

Assuming the 90 days trading horizon Iat Automobile Technology is expected to generate 1.49 times more return on investment than Guangzhou Jointas. However, Iat Automobile is 1.49 times more volatile than Guangzhou Jointas Chemical. It trades about 0.01 of its potential returns per unit of risk. Guangzhou Jointas Chemical is currently generating about -0.04 per unit of risk. If you would invest  1,218  in Iat Automobile Technology on October 11, 2024 and sell it today you would lose (102.00) from holding Iat Automobile Technology or give up 8.37% of portfolio value over 90 days.

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

Iat Automobile Technology  vs.  Guangzhou Jointas Chemical

Iat Automobile Technology

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Iat Automobile Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Iat Automobile sustained solid returns over the last few months and may actually be approaching a breakup point.

Guangzhou Jointas

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Jointas Chemical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Jointas may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Iat Automobile and Guangzhou Jointas

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

The idea behind Iat Automobile Technology and Guangzhou Jointas Chemical 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.