Correlation Between Guangzhou Automobile and First Hydrogen

Can any of the company-specific risk be diversified away by investing in both Guangzhou Automobile and First Hydrogen 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 First Hydrogen 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 First Hydrogen Corp, you can compare the effects of market volatilities on Guangzhou Automobile and First Hydrogen 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 First Hydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Automobile and First Hydrogen.

Diversification Opportunities for Guangzhou Automobile and First Hydrogen

0.23

Correlation Coefficient

Guangzhou Automobile  First Hydrogen

Modest diversification

The 3 months correlation between Guangzhou and First is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Automobile Group and First Hydrogen Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hydrogen Corp 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 First Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hydrogen Corp has no effect on the direction of Guangzhou Automobile i.e., Guangzhou Automobile and First Hydrogen go up and down completely randomly.

Pair Corralation between Guangzhou Automobile and First Hydrogen

Assuming the 90 days horizon Guangzhou Automobile Group is expected to under-perform the First Hydrogen. But the pink sheet apears to be less risky and, when comparing its historical volatility, Guangzhou Automobile Group is 1.96 times less risky than First Hydrogen. The pink sheet trades about -0.01 of its potential returns per unit of risk. The First Hydrogen Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  24.00  in First Hydrogen Corp on December 30, 2024 and sell it today you would earn a total of  9.00  from holding First Hydrogen Corp or generate 37.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Guangzhou Automobile Group  vs.  First Hydrogen Corp

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.

First Hydrogen Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Hydrogen Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, First Hydrogen reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guangzhou Automobile and First Hydrogen

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

The idea behind Guangzhou Automobile Group and First Hydrogen Corp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.