Correlation Between BAIC and Volkswagen
Can any of the company-specific risk be diversified away by investing in both BAIC and Volkswagen 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 BAIC and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BAIC Motor and Volkswagen AG 110, you can compare the effects of market volatilities on BAIC and Volkswagen 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 BAIC with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of BAIC and Volkswagen.
Diversification Opportunities for BAIC and Volkswagen
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between BAIC and Volkswagen is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding BAIC Motor and Volkswagen AG 110 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 110 and BAIC 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 BAIC Motor are associated (or correlated) with Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG 110 has no effect on the direction of BAIC i.e., BAIC and Volkswagen go up and down completely randomly.
Pair Corralation between BAIC and Volkswagen
Assuming the 90 days horizon BAIC is expected to generate 2.68 times less return on investment than Volkswagen. In addition to that, BAIC is 1.2 times more volatile than Volkswagen AG 110. It trades about 0.08 of its total potential returns per unit of risk. Volkswagen AG 110 is currently generating about 0.27 per unit of volatility. If you would invest 908.00 in Volkswagen AG 110 on December 2, 2024 and sell it today you would earn a total of 193.00 from holding Volkswagen AG 110 or generate 21.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 97.56% |
Values | Daily Returns |
BAIC Motor vs. Volkswagen AG 110
Performance |
Timeline |
BAIC Motor |
Volkswagen AG 110 |
BAIC and Volkswagen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BAIC and Volkswagen
The main advantage of trading using opposite BAIC and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BAIC position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.BAIC vs. Zapp Electric Vehicles | BAIC vs. First Hydrogen Corp | BAIC vs. Guangzhou Automobile Group | BAIC vs. Phoenix Motor Common |
Volkswagen vs. Porsche Automobile Holding | Volkswagen vs. Volkswagen AG | Volkswagen vs. Mercedes Benz Group AG | Volkswagen vs. Volkswagen AG Pref |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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