Correlation Between Geely Automobile and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both Geely Automobile and Dairy Farm 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 Dairy Farm 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 Dairy Farm International, you can compare the effects of market volatilities on Geely Automobile and Dairy Farm 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 Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geely Automobile and Dairy Farm.
Diversification Opportunities for Geely Automobile and Dairy Farm
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Geely and Dairy is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International 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 Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of Geely Automobile i.e., Geely Automobile and Dairy Farm go up and down completely randomly.
Pair Corralation between Geely Automobile and Dairy Farm
Assuming the 90 days horizon Geely Automobile Holdings is expected to under-perform the Dairy Farm. But the stock apears to be less risky and, when comparing its historical volatility, Geely Automobile Holdings is 1.14 times less risky than Dairy Farm. The stock trades about -0.26 of its potential returns per unit of risk. The Dairy Farm International is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 212.00 in Dairy Farm International on October 17, 2024 and sell it today you would earn a total of 2.00 from holding Dairy Farm International or generate 0.94% 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. Dairy Farm International
Performance |
| Timeline |
| Geely Automobile Holdings |
| Dairy Farm International |
Geely Automobile and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geely Automobile and Dairy Farm
The main advantage of trading using opposite Geely Automobile and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geely Automobile position performs unexpectedly, Dairy Farm 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 Dairy Farm will offset losses from the drop in Dairy Farm's long position.| Geely Automobile vs. FORMPIPE SOFTWARE AB | Geely Automobile vs. AOI Electronics Co | Geely Automobile vs. Take Two Interactive Software | Geely Automobile vs. CyberArk Software |
| Dairy Farm vs. International Consolidated Airlines | Dairy Farm vs. SYSTEMAIR AB | Dairy Farm vs. Air New Zealand | Dairy Farm vs. FORWARD AIR P |
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 Stocks Directory module to find actively traded stocks across global markets.
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