Correlation Between AIR PRODCHEMICALS and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both AIR PRODCHEMICALS 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 AIR PRODCHEMICALS and Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR PRODCHEMICALS and Geely Automobile Holdings, you can compare the effects of market volatilities on AIR PRODCHEMICALS 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 AIR PRODCHEMICALS with a short position of Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and Geely Automobile.
Diversification Opportunities for AIR PRODCHEMICALS and Geely Automobile
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AIR and Geely is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS 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 AIR PRODCHEMICALS 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 AIR PRODCHEMICALS 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 AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and Geely Automobile go up and down completely randomly.
Pair Corralation between AIR PRODCHEMICALS and Geely Automobile
Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to generate 0.42 times more return on investment than Geely Automobile. However, AIR PRODCHEMICALS is 2.4 times less risky than Geely Automobile. It trades about 0.28 of its potential returns per unit of risk. Geely Automobile Holdings is currently generating about -0.17 per unit of risk. If you would invest 29,590 in AIR PRODCHEMICALS on August 29, 2024 and sell it today you would earn a total of 2,280 from holding AIR PRODCHEMICALS or generate 7.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR PRODCHEMICALS vs. Geely Automobile Holdings
Performance |
| Timeline |
| AIR PRODCHEMICALS |
| Geely Automobile Holdings |
AIR PRODCHEMICALS and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR PRODCHEMICALS and Geely Automobile
The main advantage of trading using opposite AIR PRODCHEMICALS and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS 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.| AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Superior Plus Corp | AIR PRODCHEMICALS 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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