Correlation Between GFL ENVIRONM and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both GFL ENVIRONM 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 GFL ENVIRONM and Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFL ENVIRONM and Geely Automobile Holdings, you can compare the effects of market volatilities on GFL ENVIRONM 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 GFL ENVIRONM with a short position of Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFL ENVIRONM and Geely Automobile.
Diversification Opportunities for GFL ENVIRONM and Geely Automobile
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GFL and Geely is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding GFL ENVIRONM 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 GFL ENVIRONM 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 GFL ENVIRONM 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 GFL ENVIRONM i.e., GFL ENVIRONM and Geely Automobile go up and down completely randomly.
Pair Corralation between GFL ENVIRONM and Geely Automobile
Assuming the 90 days horizon GFL ENVIRONM is expected to generate 3.66 times less return on investment than Geely Automobile. But when comparing it to its historical volatility, GFL ENVIRONM is 2.31 times less risky than Geely Automobile. It trades about 0.13 of its potential returns per unit of risk. Geely Automobile Holdings is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 99.00 in Geely Automobile Holdings on August 29, 2024 and sell it today you would earn a total of 59.00 from holding Geely Automobile Holdings or generate 59.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GFL ENVIRONM vs. Geely Automobile Holdings
Performance |
| Timeline |
| GFL ENVIRONM |
| Geely Automobile Holdings |
GFL ENVIRONM and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GFL ENVIRONM and Geely Automobile
The main advantage of trading using opposite GFL ENVIRONM and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFL ENVIRONM 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.| GFL ENVIRONM vs. Waste Management | GFL ENVIRONM vs. Waste Connections | GFL ENVIRONM vs. Superior Plus Corp | GFL ENVIRONM vs. SIVERS SEMICONDUCTORS AB |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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