Correlation Between Geely Automobile and GFL ENVIRONM
Can any of the company-specific risk be diversified away by investing in both Geely Automobile and GFL ENVIRONM 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 GFL ENVIRONM 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 GFL ENVIRONM, you can compare the effects of market volatilities on Geely Automobile and GFL ENVIRONM 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 GFL ENVIRONM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geely Automobile and GFL ENVIRONM.
Diversification Opportunities for Geely Automobile and GFL ENVIRONM
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Geely and GFL is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and GFL ENVIRONM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GFL ENVIRONM 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 GFL ENVIRONM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GFL ENVIRONM has no effect on the direction of Geely Automobile i.e., Geely Automobile and GFL ENVIRONM go up and down completely randomly.
Pair Corralation between Geely Automobile and GFL ENVIRONM
Assuming the 90 days horizon Geely Automobile Holdings is expected to generate 1.71 times more return on investment than GFL ENVIRONM. However, Geely Automobile is 1.71 times more volatile than GFL ENVIRONM. It trades about 0.14 of its potential returns per unit of risk. GFL ENVIRONM is currently generating about 0.16 per unit of risk. If you would invest 95.00 in Geely Automobile Holdings on August 25, 2024 and sell it today you would earn a total of 69.00 from holding Geely Automobile Holdings or generate 72.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Geely Automobile Holdings vs. GFL ENVIRONM
Performance |
| Timeline |
| Geely Automobile Holdings |
| GFL ENVIRONM |
Geely Automobile and GFL ENVIRONM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geely Automobile and GFL ENVIRONM
The main advantage of trading using opposite Geely Automobile and GFL ENVIRONM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geely Automobile position performs unexpectedly, GFL ENVIRONM 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 GFL ENVIRONM will offset losses from the drop in GFL ENVIRONM's long position.| Geely Automobile vs. Tesla Inc | Geely Automobile vs. BYD Company Limited | Geely Automobile vs. Superior Plus Corp | Geely Automobile vs. NMI Holdings |
| GFL ENVIRONM vs. Superior Plus Corp | GFL ENVIRONM vs. NMI Holdings | GFL ENVIRONM vs. Origin Agritech | GFL ENVIRONM 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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