Correlation Between Iat Automobile and CIMC Vehicles

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

By analyzing existing cross correlation between Iat Automobile Technology and CIMC Vehicles Co, you can compare the effects of market volatilities on Iat Automobile and CIMC Vehicles 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 Iat Automobile with a short position of CIMC Vehicles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iat Automobile and CIMC Vehicles.

Diversification Opportunities for Iat Automobile and CIMC Vehicles

0.56

Correlation Coefficient

Iat Automobile  CIMC Vehicles

Very weak diversification

The 3 months correlation between Iat and CIMC is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Iat Automobile Technology and CIMC Vehicles Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIMC Vehicles and Iat 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 Iat Automobile Technology are associated (or correlated) with CIMC Vehicles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIMC Vehicles has no effect on the direction of Iat Automobile i.e., Iat Automobile and CIMC Vehicles go up and down completely randomly.

Pair Corralation between Iat Automobile and CIMC Vehicles

Assuming the 90 days trading horizon Iat Automobile Technology is expected to generate 1.4 times more return on investment than CIMC Vehicles. However, Iat Automobile is 1.4 times more volatile than CIMC Vehicles Co. It trades about 0.12 of its potential returns per unit of risk. CIMC Vehicles Co is currently generating about 0.03 per unit of risk. If you would invest  912.00  in Iat Automobile Technology on September 26, 2024 and sell it today you would earn a total of  268.00  from holding Iat Automobile Technology or generate 29.39% return on investment over 90 days.

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

Iat Automobile Technology  vs.  CIMC Vehicles Co

Iat Automobile Technology

Risk-Adjusted Performance

9 of 100

OK

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

CIMC Vehicles

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CIMC Vehicles Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CIMC Vehicles may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Iat Automobile and CIMC Vehicles

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

The idea behind Iat Automobile Technology and CIMC Vehicles Co 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.