Correlation Between GEELY AUTOMOBILE and Volkswagen
Can any of the company-specific risk be diversified away by investing in both GEELY AUTOMOBILE and Volkswagen 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 Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEELY AUTOMOBILE and Volkswagen AG, you can compare the effects of market volatilities on GEELY AUTOMOBILE and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEELY AUTOMOBILE and Volkswagen.
Diversification Opportunities for GEELY AUTOMOBILE and Volkswagen
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GEELY and Volkswagen is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and Volkswagen go up and down completely randomly.
Pair Corralation between GEELY AUTOMOBILE and Volkswagen
Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to generate 1.74 times more return on investment than Volkswagen. However, GEELY AUTOMOBILE is 1.74 times more volatile than Volkswagen AG. It trades about 0.13 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.04 per unit of risk. If you would invest 77.00 in GEELY AUTOMOBILE on November 3, 2024 and sell it today you would earn a total of 102.00 from holding GEELY AUTOMOBILE or generate 132.47% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
GEELY AUTOMOBILE vs. Volkswagen AG
Performance |
Timeline |
GEELY AUTOMOBILE |
Volkswagen AG |
GEELY AUTOMOBILE and Volkswagen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GEELY AUTOMOBILE and Volkswagen
The main advantage of trading using opposite GEELY AUTOMOBILE and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEELY AUTOMOBILE position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.GEELY AUTOMOBILE vs. Daido Steel Co | GEELY AUTOMOBILE vs. Delta Electronics Public | GEELY AUTOMOBILE vs. COSMOSTEEL HLDGS | GEELY AUTOMOBILE vs. Samsung Electronics Co |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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