Correlation Between Geely Automobile and FIRSTRAND
Can any of the company-specific risk be diversified away by investing in both Geely Automobile and FIRSTRAND 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 FIRSTRAND 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 FIRSTRAND, you can compare the effects of market volatilities on Geely Automobile and FIRSTRAND 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 FIRSTRAND. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geely Automobile and FIRSTRAND.
Diversification Opportunities for Geely Automobile and FIRSTRAND
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Geely and FIRSTRAND is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and FIRSTRAND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRSTRAND 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 FIRSTRAND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRSTRAND has no effect on the direction of Geely Automobile i.e., Geely Automobile and FIRSTRAND go up and down completely randomly.
Pair Corralation between Geely Automobile and FIRSTRAND
Assuming the 90 days horizon Geely Automobile is expected to generate 1.73 times less return on investment than FIRSTRAND. But when comparing it to its historical volatility, Geely Automobile Holdings is 1.74 times less risky than FIRSTRAND. It trades about 0.05 of its potential returns per unit of risk. FIRSTRAND is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 159.00 in FIRSTRAND on September 4, 2024 and sell it today you would earn a total of 241.00 from holding FIRSTRAND or generate 151.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Geely Automobile Holdings vs. FIRSTRAND
Performance |
| Timeline |
| Geely Automobile Holdings |
| FIRSTRAND |
Geely Automobile and FIRSTRAND Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geely Automobile and FIRSTRAND
The main advantage of trading using opposite Geely Automobile and FIRSTRAND positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geely Automobile position performs unexpectedly, FIRSTRAND 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 FIRSTRAND will offset losses from the drop in FIRSTRAND's long position.| Geely Automobile vs. Tesla Inc | Geely Automobile vs. Toyota Motor | Geely Automobile vs. BYD Company Limited | Geely Automobile vs. Superior Plus Corp |
| FIRSTRAND vs. Air Lease | FIRSTRAND vs. Sixt Leasing SE | FIRSTRAND vs. Cal Maine Foods | FIRSTRAND vs. National Beverage Corp |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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