Correlation Between Dowlais Group and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both Dowlais Group 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 Dowlais Group and Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dowlais Group plc and Geely Automobile Holdings, you can compare the effects of market volatilities on Dowlais Group 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 Dowlais Group with a short position of Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dowlais Group and Geely Automobile.
Diversification Opportunities for Dowlais Group and Geely Automobile
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dowlais and Geely is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dowlais Group plc 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 Dowlais Group 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 Dowlais Group plc 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 Dowlais Group i.e., Dowlais Group and Geely Automobile go up and down completely randomly.
Pair Corralation between Dowlais Group and Geely Automobile
Assuming the 90 days horizon Dowlais Group plc is expected to under-perform the Geely Automobile. But the pink sheet apears to be less risky and, when comparing its historical volatility, Dowlais Group plc is 1.01 times less risky than Geely Automobile. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Geely Automobile Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,846 in Geely Automobile Holdings on August 28, 2024 and sell it today you would earn a total of 1,494 from holding Geely Automobile Holdings or generate 80.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.52% |
| Values | Daily Returns |
Dowlais Group plc vs. Geely Automobile Holdings
Performance |
| Timeline |
| Dowlais Group plc |
| Geely Automobile Holdings |
Dowlais Group and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dowlais Group and Geely Automobile
The main advantage of trading using opposite Dowlais Group and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dowlais Group 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.| Dowlais Group vs. Legacy Education | Dowlais Group vs. NVIDIA | Dowlais Group vs. Apple Inc | Dowlais Group vs. Microsoft |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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