Correlation Between Geely Automobile and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both Geely Automobile and Cincinnati Financial 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 Cincinnati Financial 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 Cincinnati Financial Corp, you can compare the effects of market volatilities on Geely Automobile and Cincinnati Financial 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 Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geely Automobile and Cincinnati Financial.
Diversification Opportunities for Geely Automobile and Cincinnati Financial
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Geely and Cincinnati is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and Cincinnati Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial Corp 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 Cincinnati Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cincinnati Financial Corp has no effect on the direction of Geely Automobile i.e., Geely Automobile and Cincinnati Financial go up and down completely randomly.
Pair Corralation between Geely Automobile and Cincinnati Financial
Assuming the 90 days horizon Geely Automobile Holdings is expected to generate 1.6 times more return on investment than Cincinnati Financial. However, Geely Automobile is 1.6 times more volatile than Cincinnati Financial Corp. It trades about 0.08 of its potential returns per unit of risk. Cincinnati Financial Corp is currently generating about -0.22 per unit of risk. If you would invest 167.00 in Geely Automobile Holdings on October 30, 2024 and sell it today you would earn a total of 10.00 from holding Geely Automobile Holdings or generate 5.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Geely Automobile Holdings vs. Cincinnati Financial Corp
Performance |
| Timeline |
| Geely Automobile Holdings |
| Cincinnati Financial Corp |
Geely Automobile and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geely Automobile and Cincinnati Financial
The main advantage of trading using opposite Geely Automobile and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geely Automobile position performs unexpectedly, Cincinnati Financial 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 Cincinnati Financial will offset losses from the drop in Cincinnati Financial's long position.| Geely Automobile vs. LANDSEA GREEN MANAGEMENT | Geely Automobile vs. AEGEAN AIRLINES | Geely Automobile vs. Corporate Travel Management | Geely Automobile vs. American Airlines Group |
| Cincinnati Financial vs. De Grey Mining | Cincinnati Financial vs. Canon Marketing Japan | Cincinnati Financial vs. MAGNUM MINING EXP | Cincinnati Financial vs. MAG SILVER |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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