Correlation Between Geely Automobile and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Geely Automobile and Kaiser Aluminum 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 Kaiser Aluminum 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 Kaiser Aluminum, you can compare the effects of market volatilities on Geely Automobile and Kaiser Aluminum 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 Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geely Automobile and Kaiser Aluminum.
Diversification Opportunities for Geely Automobile and Kaiser Aluminum
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Geely and Kaiser is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum 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 Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of Geely Automobile i.e., Geely Automobile and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Geely Automobile and Kaiser Aluminum
Assuming the 90 days horizon Geely Automobile is expected to generate 6.75 times less return on investment than Kaiser Aluminum. But when comparing it to its historical volatility, Geely Automobile Holdings is 1.08 times less risky than Kaiser Aluminum. It trades about 0.02 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 6,850 in Kaiser Aluminum on September 2, 2024 and sell it today you would earn a total of 650.00 from holding Kaiser Aluminum or generate 9.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Geely Automobile Holdings vs. Kaiser Aluminum
Performance |
| Timeline |
| Geely Automobile Holdings |
| Kaiser Aluminum |
Geely Automobile and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geely Automobile and Kaiser Aluminum
The main advantage of trading using opposite Geely Automobile and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geely Automobile position performs unexpectedly, Kaiser Aluminum 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 Kaiser Aluminum will offset losses from the drop in Kaiser Aluminum's long position.| Geely Automobile vs. ADRIATIC METALS LS 013355 | Geely Automobile vs. LION ONE METALS | Geely Automobile vs. GRIFFIN MINING LTD | Geely Automobile vs. Scientific Games |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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