Correlation Between Aristocrat Leisure and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure 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 Aristocrat Leisure and Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure Limited and Geely Automobile Holdings, you can compare the effects of market volatilities on Aristocrat Leisure 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 Aristocrat Leisure with a short position of Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Geely Automobile.
Diversification Opportunities for Aristocrat Leisure and Geely Automobile
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aristocrat and Geely is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure Limited 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 Aristocrat Leisure 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 Aristocrat Leisure Limited 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 Aristocrat Leisure i.e., Aristocrat Leisure and Geely Automobile go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Geely Automobile
Assuming the 90 days horizon Aristocrat Leisure is expected to generate 2.04 times less return on investment than Geely Automobile. But when comparing it to its historical volatility, Aristocrat Leisure Limited is 1.7 times less risky than Geely Automobile. It trades about 0.11 of its potential returns per unit of risk. Geely Automobile Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 73.00 in Geely Automobile Holdings on October 29, 2024 and sell it today you would earn a total of 104.00 from holding Geely Automobile Holdings or generate 142.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristocrat Leisure Limited vs. Geely Automobile Holdings
Performance |
| Timeline |
| Aristocrat Leisure |
| Geely Automobile Holdings |
Aristocrat Leisure and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Geely Automobile
The main advantage of trading using opposite Aristocrat Leisure and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure 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.| Aristocrat Leisure vs. VELA TECHNOLPLC LS 0001 | Aristocrat Leisure vs. Perdoceo Education | Aristocrat Leisure vs. PKSHA TECHNOLOGY INC | Aristocrat Leisure vs. ASPEN TECHINC DL |
| Geely Automobile vs. Cars Inc | Geely Automobile vs. DELTA AIR LINES | Geely Automobile vs. CHINA EDUCATION GROUP | Geely Automobile vs. EEDUCATION ALBERT AB |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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