Correlation Between Geely Automobile and REINET INVESTMENTS
Can any of the company-specific risk be diversified away by investing in both Geely Automobile and REINET INVESTMENTS 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 REINET INVESTMENTS 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 REINET INVESTMENTS SCA, you can compare the effects of market volatilities on Geely Automobile and REINET INVESTMENTS 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 REINET INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geely Automobile and REINET INVESTMENTS.
Diversification Opportunities for Geely Automobile and REINET INVESTMENTS
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Geely and REINET is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and REINET INVESTMENTS SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REINET INVESTMENTS SCA 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 REINET INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REINET INVESTMENTS SCA has no effect on the direction of Geely Automobile i.e., Geely Automobile and REINET INVESTMENTS go up and down completely randomly.
Pair Corralation between Geely Automobile and REINET INVESTMENTS
Assuming the 90 days horizon Geely Automobile Holdings is expected to generate 2.25 times more return on investment than REINET INVESTMENTS. However, Geely Automobile is 2.25 times more volatile than REINET INVESTMENTS SCA. It trades about -0.01 of its potential returns per unit of risk. REINET INVESTMENTS SCA is currently generating about -0.05 per unit of risk. If you would invest 170.00 in Geely Automobile Holdings on September 4, 2024 and sell it today you would lose (3.00) from holding Geely Automobile Holdings or give up 1.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Geely Automobile Holdings vs. REINET INVESTMENTS SCA
Performance |
| Timeline |
| Geely Automobile Holdings |
| REINET INVESTMENTS SCA |
Geely Automobile and REINET INVESTMENTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geely Automobile and REINET INVESTMENTS
The main advantage of trading using opposite Geely Automobile and REINET INVESTMENTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geely Automobile position performs unexpectedly, REINET INVESTMENTS 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 REINET INVESTMENTS will offset losses from the drop in REINET INVESTMENTS'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 |
| REINET INVESTMENTS vs. Blackstone Group | REINET INVESTMENTS vs. BlackRock | REINET INVESTMENTS vs. The Bank of | REINET INVESTMENTS vs. Ameriprise Financial |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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