Correlation Between GEELY AUTOMOBILE and NIPPON STEEL
Can any of the company-specific risk be diversified away by investing in both GEELY AUTOMOBILE and NIPPON STEEL 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 NIPPON STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEELY AUTOMOBILE and NIPPON STEEL SPADR, you can compare the effects of market volatilities on GEELY AUTOMOBILE and NIPPON STEEL 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 NIPPON STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEELY AUTOMOBILE and NIPPON STEEL.
Diversification Opportunities for GEELY AUTOMOBILE and NIPPON STEEL
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between GEELY and NIPPON is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and NIPPON STEEL SPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIPPON STEEL SPADR 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 NIPPON STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIPPON STEEL SPADR has no effect on the direction of GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and NIPPON STEEL go up and down completely randomly.
Pair Corralation between GEELY AUTOMOBILE and NIPPON STEEL
Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to generate 2.94 times more return on investment than NIPPON STEEL. However, GEELY AUTOMOBILE is 2.94 times more volatile than NIPPON STEEL SPADR. It trades about 0.17 of its potential returns per unit of risk. NIPPON STEEL SPADR is currently generating about 0.08 per unit of risk. If you would invest 170.00 in GEELY AUTOMOBILE on September 15, 2024 and sell it today you would earn a total of 19.00 from holding GEELY AUTOMOBILE or generate 11.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEELY AUTOMOBILE vs. NIPPON STEEL SPADR
Performance |
| Timeline |
| GEELY AUTOMOBILE |
| NIPPON STEEL SPADR |
GEELY AUTOMOBILE and NIPPON STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEELY AUTOMOBILE and NIPPON STEEL
The main advantage of trading using opposite GEELY AUTOMOBILE and NIPPON STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEELY AUTOMOBILE position performs unexpectedly, NIPPON STEEL 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 NIPPON STEEL will offset losses from the drop in NIPPON STEEL's long position.| GEELY AUTOMOBILE vs. Apple Inc | GEELY AUTOMOBILE vs. Apple Inc | GEELY AUTOMOBILE vs. Apple Inc | GEELY AUTOMOBILE vs. Apple Inc |
| NIPPON STEEL vs. Reliance Steel Aluminum | NIPPON STEEL vs. Superior Plus Corp | NIPPON STEEL vs. SIVERS SEMICONDUCTORS AB | NIPPON STEEL vs. Norsk Hydro ASA |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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