Correlation Between GEELY AUTOMOBILE and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both GEELY AUTOMOBILE and Thyssenkrupp 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 Thyssenkrupp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEELY AUTOMOBILE and thyssenkrupp AG, you can compare the effects of market volatilities on GEELY AUTOMOBILE and Thyssenkrupp 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 Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEELY AUTOMOBILE and Thyssenkrupp.
Diversification Opportunities for GEELY AUTOMOBILE and Thyssenkrupp
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GEELY and Thyssenkrupp is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and thyssenkrupp AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on thyssenkrupp AG 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 Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of thyssenkrupp AG has no effect on the direction of GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and Thyssenkrupp go up and down completely randomly.
Pair Corralation between GEELY AUTOMOBILE and Thyssenkrupp
Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to generate 1.07 times more return on investment than Thyssenkrupp. However, GEELY AUTOMOBILE is 1.07 times more volatile than thyssenkrupp AG. It trades about 0.07 of its potential returns per unit of risk. thyssenkrupp AG is currently generating about -0.01 per unit of risk. If you would invest 94.00 in GEELY AUTOMOBILE on September 14, 2024 and sell it today you would earn a total of 101.00 from holding GEELY AUTOMOBILE or generate 107.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEELY AUTOMOBILE vs. thyssenkrupp AG
Performance |
| Timeline |
| GEELY AUTOMOBILE |
| thyssenkrupp AG |
GEELY AUTOMOBILE and Thyssenkrupp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEELY AUTOMOBILE and Thyssenkrupp
The main advantage of trading using opposite GEELY AUTOMOBILE and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEELY AUTOMOBILE position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.| GEELY AUTOMOBILE vs. Apple Inc | GEELY AUTOMOBILE vs. Apple Inc | GEELY AUTOMOBILE vs. Apple Inc | GEELY AUTOMOBILE vs. Apple Inc |
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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