Correlation Between Geely Automobile and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both Geely Automobile and PennantPark Investment 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 Geely Automobile and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geely Automobile Holdings and PennantPark Investment, you can compare the effects of market volatilities on Geely Automobile and PennantPark Investment 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 Geely Automobile with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geely Automobile and PennantPark Investment.
Diversification Opportunities for Geely Automobile and PennantPark Investment
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Geely and PennantPark is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and Geely 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 Geely Automobile Holdings are associated (or correlated) with PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of Geely Automobile i.e., Geely Automobile and PennantPark Investment go up and down completely randomly.
Pair Corralation between Geely Automobile and PennantPark Investment
Assuming the 90 days horizon Geely Automobile Holdings is expected to generate 1.44 times more return on investment than PennantPark Investment. However, Geely Automobile is 1.44 times more volatile than PennantPark Investment. It trades about 0.05 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.06 per unit of risk. If you would invest 97.00 in Geely Automobile Holdings on September 3, 2024 and sell it today you would earn a total of 70.00 from holding Geely Automobile Holdings or generate 72.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Geely Automobile Holdings vs. PennantPark Investment
Performance |
| Timeline |
| Geely Automobile Holdings |
| PennantPark Investment |
Geely Automobile and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geely Automobile and PennantPark Investment
The main advantage of trading using opposite Geely Automobile and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geely Automobile position performs unexpectedly, PennantPark Investment 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 PennantPark Investment will offset losses from the drop in PennantPark Investment's long position.| Geely Automobile vs. Tesla Inc | Geely Automobile vs. Toyota Motor | Geely Automobile vs. BYD Company Limited | Geely Automobile vs. Superior Plus Corp |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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