Correlation Between Geely Automobile and Fortescue Metals
Can any of the company-specific risk be diversified away by investing in both Geely Automobile and Fortescue Metals 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 Fortescue Metals 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 Fortescue Metals Group, you can compare the effects of market volatilities on Geely Automobile and Fortescue Metals 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 Fortescue Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geely Automobile and Fortescue Metals.
Diversification Opportunities for Geely Automobile and Fortescue Metals
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Geely and Fortescue is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and Fortescue Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortescue Metals 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 Fortescue Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortescue Metals has no effect on the direction of Geely Automobile i.e., Geely Automobile and Fortescue Metals go up and down completely randomly.
Pair Corralation between Geely Automobile and Fortescue Metals
Assuming the 90 days horizon Geely Automobile Holdings is expected to generate 1.49 times more return on investment than Fortescue Metals. However, Geely Automobile is 1.49 times more volatile than Fortescue Metals Group. It trades about 0.18 of its potential returns per unit of risk. Fortescue Metals Group is currently generating about 0.04 per unit of risk. If you would invest 94.00 in Geely Automobile Holdings on October 25, 2024 and sell it today you would earn a total of 86.00 from holding Geely Automobile Holdings or generate 91.49% 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. Fortescue Metals Group
Performance |
| Timeline |
| Geely Automobile Holdings |
| Fortescue Metals |
Geely Automobile and Fortescue Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geely Automobile and Fortescue Metals
The main advantage of trading using opposite Geely Automobile and Fortescue Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geely Automobile position performs unexpectedly, Fortescue Metals 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 Fortescue Metals will offset losses from the drop in Fortescue Metals' long position.| Geely Automobile vs. Air New Zealand | Geely Automobile vs. Pentair plc | Geely Automobile vs. CHINA SOUTHN AIR H | Geely Automobile vs. Spirent Communications plc |
| Fortescue Metals vs. BHP Group Limited | Fortescue Metals vs. BHP Group Limited | Fortescue Metals vs. Rio Tinto Group | Fortescue Metals vs. Vale SA |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |