Correlation Between Adtalem Global and GEELY AUTOMOBILE
Can any of the company-specific risk be diversified away by investing in both Adtalem Global 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 Adtalem Global and GEELY AUTOMOBILE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adtalem Global Education and GEELY AUTOMOBILE, you can compare the effects of market volatilities on Adtalem Global 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 Adtalem Global with a short position of GEELY AUTOMOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adtalem Global and GEELY AUTOMOBILE.
Diversification Opportunities for Adtalem Global and GEELY AUTOMOBILE
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adtalem and GEELY is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Adtalem Global Education and GEELY AUTOMOBILE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEELY AUTOMOBILE and Adtalem Global 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 Adtalem Global Education 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 Adtalem Global i.e., Adtalem Global and GEELY AUTOMOBILE go up and down completely randomly.
Pair Corralation between Adtalem Global and GEELY AUTOMOBILE
Assuming the 90 days trading horizon Adtalem Global Education is expected to generate 1.1 times more return on investment than GEELY AUTOMOBILE. However, Adtalem Global is 1.1 times more volatile than GEELY AUTOMOBILE. It trades about 0.38 of its potential returns per unit of risk. GEELY AUTOMOBILE is currently generating about -0.17 per unit of risk. If you would invest 6,750 in Adtalem Global Education on August 27, 2024 and sell it today you would earn a total of 1,850 from holding Adtalem Global Education or generate 27.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adtalem Global Education vs. GEELY AUTOMOBILE
Performance |
| Timeline |
| Adtalem Global Education |
| GEELY AUTOMOBILE |
Adtalem Global and GEELY AUTOMOBILE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adtalem Global and GEELY AUTOMOBILE
The main advantage of trading using opposite Adtalem Global and GEELY AUTOMOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adtalem Global 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.| Adtalem Global vs. Quaker Chemical | Adtalem Global vs. KINGBOARD CHEMICAL | Adtalem Global vs. China BlueChemical | Adtalem Global vs. Western Copper and |
| GEELY AUTOMOBILE vs. Sekisui Chemical Co | GEELY AUTOMOBILE vs. Adtalem Global Education | GEELY AUTOMOBILE vs. KINGBOARD CHEMICAL | GEELY AUTOMOBILE vs. G8 EDUCATION |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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