Correlation Between AECOM TECHNOLOGY and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both AECOM TECHNOLOGY 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 AECOM TECHNOLOGY and Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AECOM TECHNOLOGY and Geely Automobile Holdings, you can compare the effects of market volatilities on AECOM TECHNOLOGY 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 AECOM TECHNOLOGY with a short position of Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM TECHNOLOGY and Geely Automobile.
Diversification Opportunities for AECOM TECHNOLOGY and Geely Automobile
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AECOM and Geely is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY 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 AECOM TECHNOLOGY 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 AECOM TECHNOLOGY 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 AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and Geely Automobile go up and down completely randomly.
Pair Corralation between AECOM TECHNOLOGY and Geely Automobile
Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to generate 0.84 times more return on investment than Geely Automobile. However, AECOM TECHNOLOGY is 1.19 times less risky than Geely Automobile. It trades about 0.27 of its potential returns per unit of risk. Geely Automobile Holdings is currently generating about -0.19 per unit of risk. If you would invest 9,650 in AECOM TECHNOLOGY on August 28, 2024 and sell it today you would earn a total of 1,450 from holding AECOM TECHNOLOGY or generate 15.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
AECOM TECHNOLOGY vs. Geely Automobile Holdings
Performance |
| Timeline |
| AECOM TECHNOLOGY |
| Geely Automobile Holdings |
AECOM TECHNOLOGY and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AECOM TECHNOLOGY and Geely Automobile
The main advantage of trading using opposite AECOM TECHNOLOGY and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AECOM TECHNOLOGY 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.| AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Microsoft | AECOM TECHNOLOGY vs. Microsoft |
| Geely Automobile vs. Superior Plus Corp | Geely Automobile vs. NMI Holdings | Geely Automobile vs. Origin Agritech | Geely Automobile vs. SIVERS SEMICONDUCTORS AB |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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