Correlation Between CLOUDFLARE INC and GEELY AUTOMOBILE
Can any of the company-specific risk be diversified away by investing in both CLOUDFLARE INC 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 CLOUDFLARE INC and GEELY AUTOMOBILE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CLOUDFLARE INC A and GEELY AUTOMOBILE, you can compare the effects of market volatilities on CLOUDFLARE INC 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 CLOUDFLARE INC with a short position of GEELY AUTOMOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CLOUDFLARE INC and GEELY AUTOMOBILE.
Diversification Opportunities for CLOUDFLARE INC and GEELY AUTOMOBILE
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CLOUDFLARE and GEELY is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding CLOUDFLARE INC A and GEELY AUTOMOBILE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEELY AUTOMOBILE and CLOUDFLARE INC 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 CLOUDFLARE INC A 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 CLOUDFLARE INC i.e., CLOUDFLARE INC and GEELY AUTOMOBILE go up and down completely randomly.
Pair Corralation between CLOUDFLARE INC and GEELY AUTOMOBILE
Assuming the 90 days trading horizon CLOUDFLARE INC A is expected to generate 1.18 times more return on investment than GEELY AUTOMOBILE. However, CLOUDFLARE INC is 1.18 times more volatile than GEELY AUTOMOBILE. It trades about 0.31 of its potential returns per unit of risk. GEELY AUTOMOBILE is currently generating about 0.05 per unit of risk. If you would invest 8,330 in CLOUDFLARE INC A on November 6, 2024 and sell it today you would earn a total of 5,146 from holding CLOUDFLARE INC A or generate 61.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.33% |
| Values | Daily Returns |
CLOUDFLARE INC A vs. GEELY AUTOMOBILE
Performance |
| Timeline |
| CLOUDFLARE INC A |
| GEELY AUTOMOBILE |
CLOUDFLARE INC and GEELY AUTOMOBILE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CLOUDFLARE INC and GEELY AUTOMOBILE
The main advantage of trading using opposite CLOUDFLARE INC and GEELY AUTOMOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CLOUDFLARE INC 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.| CLOUDFLARE INC vs. Solstad Offshore ASA | CLOUDFLARE INC vs. Warner Music Group | CLOUDFLARE INC vs. Pentair plc | CLOUDFLARE INC vs. Norwegian Air Shuttle |
| GEELY AUTOMOBILE vs. Apple Inc | GEELY AUTOMOBILE vs. Apple Inc | GEELY AUTOMOBILE vs. Apple Inc | GEELY AUTOMOBILE vs. Apple Inc |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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