Correlation Between Geely Automobile and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both Geely Automobile and Insurance Australia 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 Insurance Australia 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 Insurance Australia Group, you can compare the effects of market volatilities on Geely Automobile and Insurance Australia 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 Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geely Automobile and Insurance Australia.
Diversification Opportunities for Geely Automobile and Insurance Australia
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Geely and Insurance is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia 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 Insurance Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insurance Australia has no effect on the direction of Geely Automobile i.e., Geely Automobile and Insurance Australia go up and down completely randomly.
Pair Corralation between Geely Automobile and Insurance Australia
Assuming the 90 days horizon Geely Automobile Holdings is expected to under-perform the Insurance Australia. In addition to that, Geely Automobile is 1.33 times more volatile than Insurance Australia Group. It trades about -0.12 of its total potential returns per unit of risk. Insurance Australia Group is currently generating about 0.2 per unit of volatility. If you would invest 448.00 in Insurance Australia Group on August 26, 2024 and sell it today you would earn a total of 44.00 from holding Insurance Australia Group or generate 9.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Geely Automobile Holdings vs. Insurance Australia Group
Performance |
| Timeline |
| Geely Automobile Holdings |
| Insurance Australia |
Geely Automobile and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geely Automobile and Insurance Australia
The main advantage of trading using opposite Geely Automobile and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geely Automobile position performs unexpectedly, Insurance Australia 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 Insurance Australia will offset losses from the drop in Insurance Australia's long position.| Geely Automobile vs. Tesla Inc | Geely Automobile vs. BYD Company Limited | Geely Automobile vs. Superior Plus Corp | Geely Automobile vs. NMI Holdings |
| Insurance Australia vs. Superior Plus Corp | Insurance Australia vs. NMI Holdings | Insurance Australia vs. Origin Agritech | Insurance Australia vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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