Correlation Between Geely Automobile and BP PLC
Can any of the company-specific risk be diversified away by investing in both Geely Automobile and BP PLC 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 BP PLC 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 BP PLC DZ1, you can compare the effects of market volatilities on Geely Automobile and BP PLC 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 BP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geely Automobile and BP PLC.
Diversification Opportunities for Geely Automobile and BP PLC
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Geely and BPE is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and BP PLC DZ1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP PLC DZ1 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 BP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP PLC DZ1 has no effect on the direction of Geely Automobile i.e., Geely Automobile and BP PLC go up and down completely randomly.
Pair Corralation between Geely Automobile and BP PLC
Assuming the 90 days horizon Geely Automobile Holdings is expected to generate 1.57 times more return on investment than BP PLC. However, Geely Automobile is 1.57 times more volatile than BP PLC DZ1. It trades about 0.07 of its potential returns per unit of risk. BP PLC DZ1 is currently generating about -0.01 per unit of risk. If you would invest 94.00 in Geely Automobile Holdings on September 14, 2024 and sell it today you would earn a total of 100.00 from holding Geely Automobile Holdings or generate 106.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Geely Automobile Holdings vs. BP PLC DZ1
Performance |
| Timeline |
| Geely Automobile Holdings |
| BP PLC DZ1 |
Geely Automobile and BP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geely Automobile and BP PLC
The main advantage of trading using opposite Geely Automobile and BP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geely Automobile position performs unexpectedly, BP PLC 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 BP PLC will offset losses from the drop in BP PLC's long position.| Geely Automobile vs. BYD Company Limited | Geely Automobile vs. MERCEDES BENZ GRP ADR14 | Geely Automobile vs. Superior Plus Corp | Geely Automobile vs. SIVERS SEMICONDUCTORS AB |
| BP PLC vs. Fast Retailing Co | BP PLC vs. Grupo Carso SAB | BP PLC vs. Geely Automobile Holdings | BP PLC vs. CARSALESCOM |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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