Correlation Between Guangzhou Automobile and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both Guangzhou Automobile 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 Guangzhou Automobile and Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangzhou Automobile Group and Geely Automobile Holdings, you can compare the effects of market volatilities on Guangzhou Automobile 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 Guangzhou Automobile with a short position of Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Automobile and Geely Automobile.
Diversification Opportunities for Guangzhou Automobile and Geely Automobile
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Guangzhou and Geely is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Automobile Group 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 Guangzhou Automobile 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 Guangzhou Automobile Group 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 Guangzhou Automobile i.e., Guangzhou Automobile and Geely Automobile go up and down completely randomly.
Pair Corralation between Guangzhou Automobile and Geely Automobile
Assuming the 90 days horizon Guangzhou Automobile is expected to generate 1.38 times less return on investment than Geely Automobile. In addition to that, Guangzhou Automobile is 2.59 times more volatile than Geely Automobile Holdings. It trades about 0.02 of its total potential returns per unit of risk. Geely Automobile Holdings is currently generating about 0.06 per unit of volatility. If you would invest 176.00 in Geely Automobile Holdings on November 1, 2024 and sell it today you would earn a total of 14.00 from holding Geely Automobile Holdings or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou Automobile Group vs. Geely Automobile Holdings
Performance |
| Timeline |
| Guangzhou Automobile |
| Geely Automobile Holdings |
Guangzhou Automobile and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Automobile and Geely Automobile
The main advantage of trading using opposite Guangzhou Automobile and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Automobile 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.| Guangzhou Automobile vs. Great Wall Motor | Guangzhou Automobile vs. Dongfeng Group | Guangzhou Automobile vs. Great Wall Motor | Guangzhou Automobile vs. BAIC Motor |
| Geely Automobile vs. Aston Martin Lagonda | Geely Automobile vs. Aston Martin Lagonda | Geely Automobile vs. Great Wall Motor | Geely Automobile vs. Polestar Automotive Holding |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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