Correlation Between Geely Automobile and Guangdong Investment
Can any of the company-specific risk be diversified away by investing in both Geely Automobile and Guangdong Investment 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 Guangdong Investment 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 Guangdong Investment Limited, you can compare the effects of market volatilities on Geely Automobile and Guangdong Investment 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 Guangdong Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geely Automobile and Guangdong Investment.
Diversification Opportunities for Geely Automobile and Guangdong Investment
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Geely and Guangdong is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and Guangdong Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Investment 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 Guangdong Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Investment has no effect on the direction of Geely Automobile i.e., Geely Automobile and Guangdong Investment go up and down completely randomly.
Pair Corralation between Geely Automobile and Guangdong Investment
Assuming the 90 days horizon Geely Automobile Holdings is expected to generate 0.44 times more return on investment than Guangdong Investment. However, Geely Automobile Holdings is 2.28 times less risky than Guangdong Investment. It trades about -0.17 of its potential returns per unit of risk. Guangdong Investment Limited is currently generating about -0.13 per unit of risk. If you would invest 185.00 in Geely Automobile Holdings on October 25, 2024 and sell it today you would lose (10.00) from holding Geely Automobile Holdings or give up 5.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Geely Automobile Holdings vs. Guangdong Investment Limited
Performance |
| Timeline |
| Geely Automobile Holdings |
| Guangdong Investment |
Geely Automobile and Guangdong Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geely Automobile and Guangdong Investment
The main advantage of trading using opposite Geely Automobile and Guangdong Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geely Automobile position performs unexpectedly, Guangdong Investment 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 Guangdong Investment will offset losses from the drop in Guangdong Investment's 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 |
| Guangdong Investment vs. American Water Works | Guangdong Investment vs. United Utilities Group | Guangdong Investment vs. Gelsenwasser AG | Guangdong Investment vs. American States Water |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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