Correlation Between GEELY AUTOMOBILE and ALERION CLEANPOWER
Can any of the company-specific risk be diversified away by investing in both GEELY AUTOMOBILE and ALERION CLEANPOWER 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 ALERION CLEANPOWER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEELY AUTOMOBILE and ALERION CLEANPOWER, you can compare the effects of market volatilities on GEELY AUTOMOBILE and ALERION CLEANPOWER 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 ALERION CLEANPOWER. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEELY AUTOMOBILE and ALERION CLEANPOWER.
Diversification Opportunities for GEELY AUTOMOBILE and ALERION CLEANPOWER
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GEELY and ALERION is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and ALERION CLEANPOWER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALERION CLEANPOWER 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 ALERION CLEANPOWER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALERION CLEANPOWER has no effect on the direction of GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and ALERION CLEANPOWER go up and down completely randomly.
Pair Corralation between GEELY AUTOMOBILE and ALERION CLEANPOWER
Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to under-perform the ALERION CLEANPOWER. But the stock apears to be less risky and, when comparing its historical volatility, GEELY AUTOMOBILE is 1.14 times less risky than ALERION CLEANPOWER. The stock trades about -0.45 of its potential returns per unit of risk. The ALERION CLEANPOWER is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest 1,744 in ALERION CLEANPOWER on October 13, 2024 and sell it today you would lose (124.00) from holding ALERION CLEANPOWER or give up 7.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEELY AUTOMOBILE vs. ALERION CLEANPOWER
Performance |
| Timeline |
| GEELY AUTOMOBILE |
| ALERION CLEANPOWER |
GEELY AUTOMOBILE and ALERION CLEANPOWER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEELY AUTOMOBILE and ALERION CLEANPOWER
The main advantage of trading using opposite GEELY AUTOMOBILE and ALERION CLEANPOWER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEELY AUTOMOBILE position performs unexpectedly, ALERION CLEANPOWER 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 ALERION CLEANPOWER will offset losses from the drop in ALERION CLEANPOWER's long position.| GEELY AUTOMOBILE vs. HK Electric Investments | GEELY AUTOMOBILE vs. Virtus Investment Partners | GEELY AUTOMOBILE vs. CITY OFFICE REIT | GEELY AUTOMOBILE vs. British American Tobacco |
| ALERION CLEANPOWER vs. Burlington Stores | ALERION CLEANPOWER vs. China Resources Beer | ALERION CLEANPOWER vs. Caseys General Stores | ALERION CLEANPOWER vs. Monster Beverage Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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