Correlation Between Novanta and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both Novanta and Geely 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 Novanta and Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novanta and Geely Automobile Holdings, you can compare the effects of market volatilities on Novanta and Geely 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 Novanta with a short position of Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novanta and Geely Automobile.
Diversification Opportunities for Novanta and Geely Automobile
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Novanta and Geely is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Novanta and Geely Automobile Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geely Automobile Holdings and Novanta 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 Novanta are associated (or correlated) with Geely Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geely Automobile Holdings has no effect on the direction of Novanta i.e., Novanta and Geely Automobile go up and down completely randomly.
Pair Corralation between Novanta and Geely Automobile
Assuming the 90 days trading horizon Novanta is expected to generate 0.9 times more return on investment than Geely Automobile. However, Novanta is 1.11 times less risky than Geely Automobile. It trades about -0.01 of its potential returns per unit of risk. Geely Automobile Holdings is currently generating about -0.17 per unit of risk. If you would invest 16,100 in Novanta on August 29, 2024 and sell it today you would lose (200.00) from holding Novanta or give up 1.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novanta vs. Geely Automobile Holdings
Performance |
| Timeline |
| Novanta |
| Geely Automobile Holdings |
Novanta and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novanta and Geely Automobile
The main advantage of trading using opposite Novanta and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novanta position performs unexpectedly, Geely 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 Geely Automobile will offset losses from the drop in Geely Automobile's long position.| Novanta vs. Tencent Music Entertainment | Novanta vs. Sekisui Chemical Co | Novanta vs. UNIVMUSIC GRPADR050 | Novanta vs. PTT Global Chemical |
| Geely Automobile vs. STORE ELECTRONIC | Geely Automobile vs. BYD ELECTRONIC | Geely Automobile vs. Arrow Electronics | Geely Automobile vs. PennantPark Investment |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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