Correlation Between GEELY AUTOMOBILE and Renesas Electronics
Can any of the company-specific risk be diversified away by investing in both GEELY AUTOMOBILE and Renesas Electronics 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 Renesas Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEELY AUTOMOBILE and Renesas Electronics, you can compare the effects of market volatilities on GEELY AUTOMOBILE and Renesas Electronics 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 Renesas Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEELY AUTOMOBILE and Renesas Electronics.
Diversification Opportunities for GEELY AUTOMOBILE and Renesas Electronics
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GEELY and Renesas is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and Renesas Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renesas Electronics 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 Renesas Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renesas Electronics has no effect on the direction of GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and Renesas Electronics go up and down completely randomly.
Pair Corralation between GEELY AUTOMOBILE and Renesas Electronics
Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to under-perform the Renesas Electronics. But the stock apears to be less risky and, when comparing its historical volatility, GEELY AUTOMOBILE is 1.54 times less risky than Renesas Electronics. The stock trades about -0.28 of its potential returns per unit of risk. The Renesas Electronics is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,261 in Renesas Electronics on October 11, 2024 and sell it today you would earn a total of 54.00 from holding Renesas Electronics or generate 4.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEELY AUTOMOBILE vs. Renesas Electronics
Performance |
| Timeline |
| GEELY AUTOMOBILE |
| Renesas Electronics |
GEELY AUTOMOBILE and Renesas Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEELY AUTOMOBILE and Renesas Electronics
The main advantage of trading using opposite GEELY AUTOMOBILE and Renesas Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEELY AUTOMOBILE position performs unexpectedly, Renesas Electronics 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 Renesas Electronics will offset losses from the drop in Renesas Electronics' long position.| GEELY AUTOMOBILE vs. CarsalesCom | GEELY AUTOMOBILE vs. Xenia Hotels Resorts | GEELY AUTOMOBILE vs. Gruppo Mutuionline SpA | GEELY AUTOMOBILE vs. CODERE ONLINE LUX |
| Renesas Electronics vs. GEAR4MUSIC LS 10 | Renesas Electronics vs. CARSALESCOM | Renesas Electronics vs. GEELY AUTOMOBILE | Renesas Electronics vs. ITALIAN WINE BRANDS |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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