Correlation Between GEELY AUTOMOBILE and SECOM CO
Can any of the company-specific risk be diversified away by investing in both GEELY AUTOMOBILE and SECOM CO 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 SECOM CO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEELY AUTOMOBILE and SECOM LTD, you can compare the effects of market volatilities on GEELY AUTOMOBILE and SECOM CO 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 SECOM CO. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEELY AUTOMOBILE and SECOM CO.
Diversification Opportunities for GEELY AUTOMOBILE and SECOM CO
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GEELY and SECOM is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and SECOM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SECOM LTD 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 SECOM CO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SECOM LTD has no effect on the direction of GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and SECOM CO go up and down completely randomly.
Pair Corralation between GEELY AUTOMOBILE and SECOM CO
Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to generate 1.73 times more return on investment than SECOM CO. However, GEELY AUTOMOBILE is 1.73 times more volatile than SECOM LTD. It trades about 0.06 of its potential returns per unit of risk. SECOM LTD is currently generating about 0.03 per unit of risk. If you would invest 95.00 in GEELY AUTOMOBILE on October 16, 2024 and sell it today you would earn a total of 74.00 from holding GEELY AUTOMOBILE or generate 77.89% 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. SECOM LTD
Performance |
| Timeline |
| GEELY AUTOMOBILE |
| SECOM LTD |
GEELY AUTOMOBILE and SECOM CO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEELY AUTOMOBILE and SECOM CO
The main advantage of trading using opposite GEELY AUTOMOBILE and SECOM CO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEELY AUTOMOBILE position performs unexpectedly, SECOM CO 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 SECOM CO will offset losses from the drop in SECOM CO's long position.| GEELY AUTOMOBILE vs. Ultra Clean Holdings | GEELY AUTOMOBILE vs. LOANDEPOT INC A | GEELY AUTOMOBILE vs. Casio Computer CoLtd | GEELY AUTOMOBILE vs. GMO Internet |
| SECOM CO vs. Shenandoah Telecommunications | SECOM CO vs. Coor Service Management | SECOM CO vs. GEELY AUTOMOBILE | SECOM CO vs. TELECOM ITALRISP ADR10 |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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