Correlation Between Geely Automobile and Vitec Software
Can any of the company-specific risk be diversified away by investing in both Geely Automobile and Vitec Software 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 Vitec Software 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 Vitec Software Group, you can compare the effects of market volatilities on Geely Automobile and Vitec Software 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 Vitec Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geely Automobile and Vitec Software.
Diversification Opportunities for Geely Automobile and Vitec Software
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Geely and Vitec is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and Vitec Software Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitec Software Group 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 Vitec Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitec Software Group has no effect on the direction of Geely Automobile i.e., Geely Automobile and Vitec Software go up and down completely randomly.
Pair Corralation between Geely Automobile and Vitec Software
Assuming the 90 days trading horizon Geely Automobile is expected to generate 6.57 times less return on investment than Vitec Software. In addition to that, Geely Automobile is 1.16 times more volatile than Vitec Software Group. It trades about 0.02 of its total potential returns per unit of risk. Vitec Software Group is currently generating about 0.12 per unit of volatility. If you would invest 55,092 in Vitec Software Group on November 5, 2024 and sell it today you would earn a total of 3,358 from holding Vitec Software Group or generate 6.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Geely Automobile Holdings vs. Vitec Software Group
Performance |
| Timeline |
| Geely Automobile Holdings |
| Vitec Software Group |
Geely Automobile and Vitec Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geely Automobile and Vitec Software
The main advantage of trading using opposite Geely Automobile and Vitec Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geely Automobile position performs unexpectedly, Vitec Software 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 Vitec Software will offset losses from the drop in Vitec Software's long position.| Geely Automobile vs. Coeur Mining | Geely Automobile vs. Primary Health Properties | Geely Automobile vs. Spire Healthcare Group | Geely Automobile vs. Inspiration Healthcare Group |
| Vitec Software vs. Cairo Communication SpA | Vitec Software vs. Zoom Video Communications | Vitec Software vs. Geely Automobile Holdings | Vitec Software vs. Grieg Seafood |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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