Correlation Between TRAINLINE PLC and GEELY AUTOMOBILE
Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC 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 TRAINLINE PLC and GEELY AUTOMOBILE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRAINLINE PLC LS and GEELY AUTOMOBILE, you can compare the effects of market volatilities on TRAINLINE PLC 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 TRAINLINE PLC with a short position of GEELY AUTOMOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and GEELY AUTOMOBILE.
Diversification Opportunities for TRAINLINE PLC and GEELY AUTOMOBILE
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TRAINLINE and GEELY is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS and GEELY AUTOMOBILE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEELY AUTOMOBILE and TRAINLINE PLC 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 TRAINLINE PLC LS 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 has no effect on the direction of TRAINLINE PLC i.e., TRAINLINE PLC and GEELY AUTOMOBILE go up and down completely randomly.
Pair Corralation between TRAINLINE PLC and GEELY AUTOMOBILE
Assuming the 90 days trading horizon TRAINLINE PLC LS is expected to generate 1.2 times more return on investment than GEELY AUTOMOBILE. However, TRAINLINE PLC is 1.2 times more volatile than GEELY AUTOMOBILE. It trades about -0.21 of its potential returns per unit of risk. GEELY AUTOMOBILE is currently generating about -0.45 per unit of risk. If you would invest 520.00 in TRAINLINE PLC LS on October 13, 2024 and sell it today you would lose (38.00) from holding TRAINLINE PLC LS or give up 7.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRAINLINE PLC LS vs. GEELY AUTOMOBILE
Performance |
| Timeline |
| TRAINLINE PLC LS |
| GEELY AUTOMOBILE |
TRAINLINE PLC and GEELY AUTOMOBILE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRAINLINE PLC and GEELY AUTOMOBILE
The main advantage of trading using opposite TRAINLINE PLC and GEELY AUTOMOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAINLINE PLC 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.| TRAINLINE PLC vs. SEKISUI CHEMICAL | TRAINLINE PLC vs. China BlueChemical | TRAINLINE PLC vs. Kingdee International Software | TRAINLINE PLC vs. AIR PRODCHEMICALS |
| GEELY AUTOMOBILE vs. HK Electric Investments | GEELY AUTOMOBILE vs. Virtus Investment Partners | GEELY AUTOMOBILE vs. CITY OFFICE REIT | GEELY AUTOMOBILE vs. British American Tobacco |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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