Correlation Between Geely Automobile and New Residential
Can any of the company-specific risk be diversified away by investing in both Geely Automobile and New Residential 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 Geely Automobile and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geely Automobile Holdings and New Residential Investment, you can compare the effects of market volatilities on Geely Automobile and New Residential 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 Geely Automobile with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geely Automobile and New Residential.
Diversification Opportunities for Geely Automobile and New Residential
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Geely and New is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve and Geely 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 Geely Automobile Holdings are associated (or correlated) with New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of Geely Automobile i.e., Geely Automobile and New Residential go up and down completely randomly.
Pair Corralation between Geely Automobile and New Residential
Assuming the 90 days trading horizon Geely Automobile is expected to generate 9.14 times less return on investment than New Residential. In addition to that, Geely Automobile is 1.82 times more volatile than New Residential Investment. It trades about 0.01 of its total potential returns per unit of risk. New Residential Investment is currently generating about 0.24 per unit of volatility. If you would invest 1,047 in New Residential Investment on October 20, 2024 and sell it today you would earn a total of 89.00 from holding New Residential Investment or generate 8.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.24% |
Values | Daily Returns |
Geely Automobile Holdings vs. New Residential Investment
Performance |
Timeline |
Geely Automobile Holdings |
New Residential Inve |
Geely Automobile and New Residential Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Geely Automobile and New Residential
The main advantage of trading using opposite Geely Automobile and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geely Automobile position performs unexpectedly, New Residential 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 New Residential will offset losses from the drop in New Residential's long position.Geely Automobile vs. Solstad Offshore ASA | Geely Automobile vs. Young Cos Brewery | Geely Automobile vs. Verizon Communications | Geely Automobile vs. Gamma Communications PLC |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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