Correlation Between Geely Automobile and China Resources
Can any of the company-specific risk be diversified away by investing in both Geely Automobile and China Resources 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 China Resources 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 China Resources Beer, you can compare the effects of market volatilities on Geely Automobile and China Resources 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 China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geely Automobile and China Resources.
Diversification Opportunities for Geely Automobile and China Resources
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Geely and China is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and China Resources Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Beer 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 China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Beer has no effect on the direction of Geely Automobile i.e., Geely Automobile and China Resources go up and down completely randomly.
Pair Corralation between Geely Automobile and China Resources
Assuming the 90 days horizon Geely Automobile Holdings is expected to generate 0.87 times more return on investment than China Resources. However, Geely Automobile Holdings is 1.15 times less risky than China Resources. It trades about 0.06 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.01 per unit of risk. If you would invest 91.00 in Geely Automobile Holdings on October 30, 2024 and sell it today you would earn a total of 86.00 from holding Geely Automobile Holdings or generate 94.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Geely Automobile Holdings vs. China Resources Beer
Performance |
| Timeline |
| Geely Automobile Holdings |
| China Resources Beer |
Geely Automobile and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geely Automobile and China Resources
The main advantage of trading using opposite Geely Automobile and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geely Automobile position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' 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 |
| China Resources vs. American Public Education | China Resources vs. STRAYER EDUCATION | China Resources vs. EMBARK EDUCATION LTD | China Resources vs. DEVRY EDUCATION GRP |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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