Correlation Between Dow Jones and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Geely Automobile Holdings, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Geely Automobile.
Diversification Opportunities for Dow Jones and Geely Automobile
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Geely is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial 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 Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Geely Automobile go up and down completely randomly.
Pair Corralation between Dow Jones and Geely Automobile
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.6 times less return on investment than Geely Automobile. But when comparing it to its historical volatility, Dow Jones Industrial is 3.51 times less risky than Geely Automobile. It trades about 0.09 of its potential returns per unit of risk. Geely Automobile Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,784 in Geely Automobile Holdings on November 9, 2024 and sell it today you would earn a total of 1,166 from holding Geely Automobile Holdings or generate 41.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Dow Jones Industrial vs. Geely Automobile Holdings
Performance |
| Timeline |
Dow Jones and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Geely Automobile Holdings
Pair trading matchups for Geely Automobile
Pair Trading with Dow Jones and Geely Automobile
The main advantage of trading using opposite Dow Jones and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Douglas Emmett | Dow Jones vs. Todos Medical | Dow Jones vs. Eastern Co | Dow Jones vs. Merit Medical Systems |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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