Correlation Between Geely Automobile and Baker Steel
Can any of the company-specific risk be diversified away by investing in both Geely Automobile and Baker Steel 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 Baker Steel 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 Baker Steel Resources, you can compare the effects of market volatilities on Geely Automobile and Baker Steel 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 Baker Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geely Automobile and Baker Steel.
Diversification Opportunities for Geely Automobile and Baker Steel
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Geely and Baker is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and Baker Steel Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Steel Resources 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 Baker Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Steel Resources has no effect on the direction of Geely Automobile i.e., Geely Automobile and Baker Steel go up and down completely randomly.
Pair Corralation between Geely Automobile and Baker Steel
Assuming the 90 days trading horizon Geely Automobile Holdings is expected to generate 4.43 times more return on investment than Baker Steel. However, Geely Automobile is 4.43 times more volatile than Baker Steel Resources. It trades about 0.11 of its potential returns per unit of risk. Baker Steel Resources is currently generating about 0.04 per unit of risk. If you would invest 782.00 in Geely Automobile Holdings on November 5, 2024 and sell it today you would earn a total of 718.00 from holding Geely Automobile Holdings or generate 91.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Geely Automobile Holdings vs. Baker Steel Resources
Performance |
| Timeline |
| Geely Automobile Holdings |
| Baker Steel Resources |
Geely Automobile and Baker Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geely Automobile and Baker Steel
The main advantage of trading using opposite Geely Automobile and Baker Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geely Automobile position performs unexpectedly, Baker Steel 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 Baker Steel will offset losses from the drop in Baker Steel'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 |
| Baker Steel vs. Adriatic Metals | Baker Steel vs. Eastinco Mining Exploration | Baker Steel vs. Medical Properties Trust | Baker Steel vs. LPKF Laser Electronics |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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