Correlation Between GEELY AUTOMOBILE and China Resources
Can any of the company-specific risk be diversified away by investing in both GEELY AUTOMOBILE and China Resources 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 China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEELY AUTOMOBILE and China Resources Beer, you can compare the effects of market volatilities on GEELY AUTOMOBILE and China Resources 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 China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEELY AUTOMOBILE and China Resources.
Diversification Opportunities for GEELY AUTOMOBILE and China Resources
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GEELY and China is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and China Resources Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Beer 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 China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Beer has no effect on the direction of GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and China Resources go up and down completely randomly.
Pair Corralation between GEELY AUTOMOBILE and China Resources
Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to under-perform the China Resources. But the stock apears to be less risky and, when comparing its historical volatility, GEELY AUTOMOBILE is 1.44 times less risky than China Resources. The stock trades about -0.13 of its potential returns per unit of risk. The China Resources Beer is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 306.00 in China Resources Beer on October 25, 2024 and sell it today you would lose (8.00) from holding China Resources Beer or give up 2.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEELY AUTOMOBILE vs. China Resources Beer
Performance |
| Timeline |
| GEELY AUTOMOBILE |
| China Resources Beer |
GEELY AUTOMOBILE and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEELY AUTOMOBILE and China Resources
The main advantage of trading using opposite GEELY AUTOMOBILE and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEELY AUTOMOBILE position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| GEELY AUTOMOBILE vs. NIGHTINGALE HEALTH EO | GEELY AUTOMOBILE vs. Cardinal Health | GEELY AUTOMOBILE vs. Iridium Communications | GEELY AUTOMOBILE vs. National Health Investors |
| China Resources vs. Verizon Communications | China Resources vs. National Beverage Corp | China Resources vs. GEELY AUTOMOBILE | China Resources vs. Singapore Telecommunications Limited |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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