Correlation Between Porsche Automobil and Great Wall
Can any of the company-specific risk be diversified away by investing in both Porsche Automobil and Great Wall 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 Porsche Automobil and Great Wall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Porsche Automobil Holding and Great Wall Motor, you can compare the effects of market volatilities on Porsche Automobil and Great Wall 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 Porsche Automobil with a short position of Great Wall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Porsche Automobil and Great Wall.
Diversification Opportunities for Porsche Automobil and Great Wall
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Porsche and Great is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Porsche Automobil Holding and Great Wall Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Wall Motor and Porsche Automobil 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 Porsche Automobil Holding are associated (or correlated) with Great Wall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Wall Motor has no effect on the direction of Porsche Automobil i.e., Porsche Automobil and Great Wall go up and down completely randomly.
Pair Corralation between Porsche Automobil and Great Wall
Assuming the 90 days horizon Porsche Automobil Holding is expected to under-perform the Great Wall. But the pink sheet apears to be less risky and, when comparing its historical volatility, Porsche Automobil Holding is 2.67 times less risky than Great Wall. The pink sheet trades about -0.16 of its potential returns per unit of risk. The Great Wall Motor is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 184.00 in Great Wall Motor on September 12, 2024 and sell it today you would lose (2.00) from holding Great Wall Motor or give up 1.09% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Porsche Automobil Holding vs. Great Wall Motor
Performance |
Timeline |
Porsche Automobil Holding |
Great Wall Motor |
Porsche Automobil and Great Wall Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Porsche Automobil and Great Wall
The main advantage of trading using opposite Porsche Automobil and Great Wall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Porsche Automobil position performs unexpectedly, Great Wall 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 Great Wall will offset losses from the drop in Great Wall's long position.Porsche Automobil vs. Volkswagen AG 110 | Porsche Automobil vs. Ferrari NV | Porsche Automobil vs. Bayerische Motoren Werke | Porsche Automobil vs. Porsche Automobile Holding |
Great Wall vs. Volkswagen AG 110 | Great Wall vs. Porsche Automobil Holding | Great Wall vs. Ferrari NV | Great Wall vs. Bayerische Motoren Werke |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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