Correlation Between GEELY AUTOMOBILE and Food Life
Can any of the company-specific risk be diversified away by investing in both GEELY AUTOMOBILE and Food Life 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 Food Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEELY AUTOMOBILE and Food Life Companies, you can compare the effects of market volatilities on GEELY AUTOMOBILE and Food Life 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 Food Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEELY AUTOMOBILE and Food Life.
Diversification Opportunities for GEELY AUTOMOBILE and Food Life
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GEELY and Food is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and Food Life Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Food Life Companies 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 are associated (or correlated) with Food Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Food Life Companies has no effect on the direction of GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and Food Life go up and down completely randomly.
Pair Corralation between GEELY AUTOMOBILE and Food Life
Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to generate 0.9 times more return on investment than Food Life. However, GEELY AUTOMOBILE is 1.1 times less risky than Food Life. It trades about -0.24 of its potential returns per unit of risk. Food Life Companies is currently generating about -0.38 per unit of risk. If you would invest 192.00 in GEELY AUTOMOBILE on October 20, 2024 and sell it today you would lose (14.00) from holding GEELY AUTOMOBILE or give up 7.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEELY AUTOMOBILE vs. Food Life Companies
Performance |
| Timeline |
| GEELY AUTOMOBILE |
| Food Life Companies |
GEELY AUTOMOBILE and Food Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEELY AUTOMOBILE and Food Life
The main advantage of trading using opposite GEELY AUTOMOBILE and Food Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEELY AUTOMOBILE position performs unexpectedly, Food Life 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 Food Life will offset losses from the drop in Food Life's long position.| GEELY AUTOMOBILE vs. Citic Telecom International | GEELY AUTOMOBILE vs. Acadia Healthcare | GEELY AUTOMOBILE vs. Darden Restaurants | GEELY AUTOMOBILE vs. SWISS WATER DECAFFCOFFEE |
| Food Life vs. Grupo Carso SAB | Food Life vs. GEELY AUTOMOBILE | Food Life vs. AOI Electronics Co | Food Life vs. STMicroelectronics NV |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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