Correlation Between American Airlines and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both American Airlines 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 American Airlines and Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Airlines Group and Geely Automobile Holdings, you can compare the effects of market volatilities on American Airlines 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 American Airlines with a short position of Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Geely Automobile.
Diversification Opportunities for American Airlines and Geely Automobile
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Geely is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group 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 American Airlines 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 American Airlines Group 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 American Airlines i.e., American Airlines and Geely Automobile go up and down completely randomly.
Pair Corralation between American Airlines and Geely Automobile
Assuming the 90 days horizon American Airlines Group is expected to under-perform the Geely Automobile. In addition to that, American Airlines is 1.67 times more volatile than Geely Automobile Holdings. It trades about -0.1 of its total potential returns per unit of risk. Geely Automobile Holdings is currently generating about 0.01 per unit of volatility. If you would invest 177.00 in Geely Automobile Holdings on November 7, 2024 and sell it today you would earn a total of 0.00 from holding Geely Automobile Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
American Airlines Group vs. Geely Automobile Holdings
Performance |
| Timeline |
| American Airlines |
| Geely Automobile Holdings |
American Airlines and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Geely Automobile
The main advantage of trading using opposite American Airlines and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines 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.| American Airlines vs. Meli Hotels International | American Airlines vs. COVIVIO HOTELS INH | American Airlines vs. Choice Hotels International | American Airlines vs. Fevertree Drinks PLC |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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