Correlation Between Sinomach Automobile and Guangzhou Haige
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By analyzing existing cross correlation between Sinomach Automobile Co and Guangzhou Haige Communications, you can compare the effects of market volatilities on Sinomach Automobile and Guangzhou Haige 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 Sinomach Automobile with a short position of Guangzhou Haige. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinomach Automobile and Guangzhou Haige.
Diversification Opportunities for Sinomach Automobile and Guangzhou Haige
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sinomach and Guangzhou is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Sinomach Automobile Co and Guangzhou Haige Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Haige Comm and Sinomach 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 Sinomach Automobile Co are associated (or correlated) with Guangzhou Haige. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Haige Comm has no effect on the direction of Sinomach Automobile i.e., Sinomach Automobile and Guangzhou Haige go up and down completely randomly.
Pair Corralation between Sinomach Automobile and Guangzhou Haige
Assuming the 90 days trading horizon Sinomach Automobile is expected to generate 1.73 times less return on investment than Guangzhou Haige. But when comparing it to its historical volatility, Sinomach Automobile Co is 1.26 times less risky than Guangzhou Haige. It trades about 0.14 of its potential returns per unit of risk. Guangzhou Haige Communications is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 864.00 in Guangzhou Haige Communications on September 6, 2024 and sell it today you would earn a total of 368.00 from holding Guangzhou Haige Communications or generate 42.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Sinomach Automobile Co vs. Guangzhou Haige Communications
Performance |
Timeline |
Sinomach Automobile |
Guangzhou Haige Comm |
Sinomach Automobile and Guangzhou Haige Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sinomach Automobile and Guangzhou Haige
The main advantage of trading using opposite Sinomach Automobile and Guangzhou Haige positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinomach Automobile position performs unexpectedly, Guangzhou Haige 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 Haige will offset losses from the drop in Guangzhou Haige's long position.The idea behind Sinomach Automobile Co and Guangzhou Haige Communications 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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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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