Correlation Between Bayerische Motoren and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both Bayerische Motoren 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 Bayerische Motoren and Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bayerische Motoren Werke and Geely Automobile Holdings, you can compare the effects of market volatilities on Bayerische Motoren 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 Bayerische Motoren with a short position of Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayerische Motoren and Geely Automobile.
Diversification Opportunities for Bayerische Motoren and Geely Automobile
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bayerische and Geely is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bayerische Motoren Werke 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 Bayerische Motoren 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 Bayerische Motoren Werke 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 Bayerische Motoren i.e., Bayerische Motoren and Geely Automobile go up and down completely randomly.
Pair Corralation between Bayerische Motoren and Geely Automobile
Assuming the 90 days horizon Bayerische Motoren Werke is expected to under-perform the Geely Automobile. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bayerische Motoren Werke is 1.3 times less risky than Geely Automobile. The pink sheet trades about -0.16 of its potential returns per unit of risk. The Geely Automobile Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,494 in Geely Automobile Holdings on September 1, 2024 and sell it today you would earn a total of 88.00 from holding Geely Automobile Holdings or generate 2.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bayerische Motoren Werke vs. Geely Automobile Holdings
Performance |
| Timeline |
| Bayerische Motoren Werke |
| Geely Automobile Holdings |
Bayerische Motoren and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayerische Motoren and Geely Automobile
The main advantage of trading using opposite Bayerische Motoren and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayerische Motoren 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.| Bayerische Motoren vs. Volkswagen AG 110 | Bayerische Motoren vs. Stellantis NV | Bayerische Motoren vs. Toyota Motor | Bayerische Motoren vs. Honda Motor Co |
| Geely Automobile vs. Great Wall Motor | Geely Automobile vs. Polestar Automotive Holding | Geely Automobile vs. Dowlais Group plc | Geely Automobile vs. BYD Company Limited |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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