Correlation Between Boxlight Corp and Guangzhou Automobile

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

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

Diversification Opportunities for Boxlight Corp and Guangzhou Automobile

0.41

Correlation Coefficient

Boxlight Corp  Guangzhou Automobile

Very weak diversification

The 3 months correlation between Boxlight and Guangzhou is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Boxlight Corp Class and Guangzhou Automobile Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Automobile and Boxlight Corp 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 Boxlight Corp Class are associated (or correlated) with Guangzhou Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Automobile has no effect on the direction of Boxlight Corp i.e., Boxlight Corp and Guangzhou Automobile go up and down completely randomly.

Pair Corralation between Boxlight Corp and Guangzhou Automobile

Given the investment horizon of 90 days Boxlight Corp Class is expected to under-perform the Guangzhou Automobile. But the stock apears to be less risky and, when comparing its historical volatility, Boxlight Corp Class is 1.23 times less risky than Guangzhou Automobile. The stock trades about -0.32 of its potential returns per unit of risk. The Guangzhou Automobile Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  40.00  in Guangzhou Automobile Group on January 29, 2024 and sell it today you would earn a total of  0.00  from holding Guangzhou Automobile Group or generate 0.0% return on investment over 90 days.

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

Boxlight Corp Class  vs.  Guangzhou Automobile Group

Boxlight Corp Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boxlight Corp Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Guangzhou Automobile

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Boxlight Corp and Guangzhou Automobile

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

The idea behind Boxlight Corp Class and Guangzhou Automobile Group 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.