Correlation Between Guangzhou Automobile and Aston Martin

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

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

Diversification Opportunities for Guangzhou Automobile and Aston Martin

0.12

Correlation Coefficient

Guangzhou Automobile  Aston Martin

Average diversification

The 3 months correlation between Guangzhou and Aston is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Automobile Group and Aston Martin Lagonda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Martin Lagonda and Guangzhou 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 Guangzhou Automobile Group are associated (or correlated) with Aston Martin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Martin Lagonda has no effect on the direction of Guangzhou Automobile i.e., Guangzhou Automobile and Aston Martin go up and down completely randomly.

Pair Corralation between Guangzhou Automobile and Aston Martin

Assuming the 90 days horizon Guangzhou Automobile Group is expected to generate 1.2 times more return on investment than Aston Martin. However, Guangzhou Automobile is 1.2 times more volatile than Aston Martin Lagonda. It trades about 0.0 of its potential returns per unit of risk. Aston Martin Lagonda is currently generating about -0.1 per unit of risk. If you would invest  44.00  in Guangzhou Automobile Group on December 23, 2024 and sell it today you would lose (2.00) from holding Guangzhou Automobile Group or give up 4.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Guangzhou Automobile Group  vs.  Aston Martin Lagonda

Guangzhou Automobile

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guangzhou Automobile Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Guangzhou Automobile is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Aston Martin Lagonda

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aston Martin Lagonda has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly 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.

Pair Trading with Guangzhou Automobile and Aston Martin

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

The idea behind Guangzhou Automobile Group and Aston Martin Lagonda 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.