Correlation Between AIB Group and GEELY AUTOMOBILE
Can any of the company-specific risk be diversified away by investing in both AIB Group 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 AIB Group and GEELY AUTOMOBILE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIB Group plc and GEELY AUTOMOBILE, you can compare the effects of market volatilities on AIB Group 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 AIB Group with a short position of GEELY AUTOMOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIB Group and GEELY AUTOMOBILE.
Diversification Opportunities for AIB Group and GEELY AUTOMOBILE
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AIB and GEELY is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding AIB Group plc and GEELY AUTOMOBILE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEELY AUTOMOBILE and AIB Group 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 AIB Group plc 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 AIB Group i.e., AIB Group and GEELY AUTOMOBILE go up and down completely randomly.
Pair Corralation between AIB Group and GEELY AUTOMOBILE
Assuming the 90 days horizon AIB Group is expected to generate 1.35 times less return on investment than GEELY AUTOMOBILE. In addition to that, AIB Group is 1.13 times more volatile than GEELY AUTOMOBILE. It trades about 0.05 of its total potential returns per unit of risk. GEELY AUTOMOBILE is currently generating about 0.07 per unit of volatility. If you would invest 92.00 in GEELY AUTOMOBILE on September 2, 2024 and sell it today you would earn a total of 76.00 from holding GEELY AUTOMOBILE or generate 82.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIB Group plc vs. GEELY AUTOMOBILE
Performance |
| Timeline |
| AIB Group plc |
| GEELY AUTOMOBILE |
AIB Group and GEELY AUTOMOBILE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIB Group and GEELY AUTOMOBILE
The main advantage of trading using opposite AIB Group and GEELY AUTOMOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIB Group 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.| AIB Group vs. NIPPON MEAT PACKERS | AIB Group vs. AUSNUTRIA DAIRY | AIB Group vs. INDOFOOD AGRI RES | AIB Group vs. SENECA FOODS A |
| GEELY AUTOMOBILE vs. SIVERS SEMICONDUCTORS AB | GEELY AUTOMOBILE vs. Darden Restaurants | GEELY AUTOMOBILE vs. Reliance Steel Aluminum | GEELY AUTOMOBILE vs. Q2M Managementberatung AG |
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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