Correlation Between SAIC and Guangdong Jingyi

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

By analyzing existing cross correlation between SAIC Motor Corp and Guangdong Jingyi Metal, you can compare the effects of market volatilities on SAIC and Guangdong Jingyi 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 SAIC with a short position of Guangdong Jingyi. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAIC and Guangdong Jingyi.

Diversification Opportunities for SAIC and Guangdong Jingyi

-0.45

Correlation Coefficient

SAIC  Guangdong Jingyi

Very good diversification

The 3 months correlation between SAIC and Guangdong is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding SAIC Motor Corp and Guangdong Jingyi Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Jingyi Metal and SAIC 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 SAIC Motor Corp are associated (or correlated) with Guangdong Jingyi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Jingyi Metal has no effect on the direction of SAIC i.e., SAIC and Guangdong Jingyi go up and down completely randomly.

Pair Corralation between SAIC and Guangdong Jingyi

Assuming the 90 days trading horizon SAIC Motor Corp is expected to under-perform the Guangdong Jingyi. In addition to that, SAIC is 1.42 times more volatile than Guangdong Jingyi Metal. It trades about -0.11 of its total potential returns per unit of risk. Guangdong Jingyi Metal is currently generating about 0.12 per unit of volatility. If you would invest  682.00  in Guangdong Jingyi Metal on December 26, 2024 and sell it today you would earn a total of  97.00  from holding Guangdong Jingyi Metal or generate 14.22% return on investment over 90 days.

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

SAIC Motor Corp  vs.  Guangdong Jingyi Metal

SAIC Motor Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days SAIC Motor Corp 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Guangdong Jingyi Metal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Jingyi Metal are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Jingyi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SAIC and Guangdong Jingyi

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

The idea behind SAIC Motor Corp and Guangdong Jingyi Metal 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.