Correlation Between Easy Software and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both Easy Software 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 Easy Software and Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Easy Software AG and Geely Automobile Holdings, you can compare the effects of market volatilities on Easy Software 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 Easy Software with a short position of Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easy Software and Geely Automobile.
Diversification Opportunities for Easy Software and Geely Automobile
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Easy and Geely is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Easy Software AG 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 Easy Software 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 Easy Software AG 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 Easy Software i.e., Easy Software and Geely Automobile go up and down completely randomly.
Pair Corralation between Easy Software and Geely Automobile
Assuming the 90 days trading horizon Easy Software AG is expected to generate 2.15 times more return on investment than Geely Automobile. However, Easy Software is 2.15 times more volatile than Geely Automobile Holdings. It trades about -0.02 of its potential returns per unit of risk. Geely Automobile Holdings is currently generating about -0.09 per unit of risk. If you would invest 1,840 in Easy Software AG on October 25, 2024 and sell it today you would lose (40.00) from holding Easy Software AG or give up 2.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Easy Software AG vs. Geely Automobile Holdings
Performance |
| Timeline |
| Easy Software AG |
| Geely Automobile Holdings |
Easy Software and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Easy Software and Geely Automobile
The main advantage of trading using opposite Easy Software and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Easy Software 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.| Easy Software vs. NXP Semiconductors NV | Easy Software vs. Ryanair Holdings plc | Easy Software vs. SEALED AIR | Easy Software vs. Corsair Gaming |
| Geely Automobile vs. Air New Zealand | Geely Automobile vs. Pentair plc | Geely Automobile vs. CHINA SOUTHN AIR H | Geely Automobile vs. Spirent Communications plc |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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