Correlation Between Sime Darby and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both Sime Darby and Geely Automobile 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 Sime Darby and Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sime Darby Bhd and Geely Automobile Holdings, you can compare the effects of market volatilities on Sime Darby and Geely Automobile 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 Sime Darby with a short position of Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sime Darby and Geely Automobile.
Diversification Opportunities for Sime Darby and Geely Automobile
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sime and Geely is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sime Darby Bhd and Geely Automobile Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geely Automobile Holdings and Sime Darby 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 Sime Darby Bhd are associated (or correlated) with Geely Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geely Automobile Holdings has no effect on the direction of Sime Darby i.e., Sime Darby and Geely Automobile go up and down completely randomly.
Pair Corralation between Sime Darby and Geely Automobile
Assuming the 90 days horizon Sime Darby Bhd is expected to generate 1.15 times more return on investment than Geely Automobile. However, Sime Darby is 1.15 times more volatile than Geely Automobile Holdings. It trades about 0.07 of its potential returns per unit of risk. Geely Automobile Holdings is currently generating about 0.02 per unit of risk. If you would invest 30.00 in Sime Darby Bhd on August 24, 2024 and sell it today you would earn a total of 21.00 from holding Sime Darby Bhd or generate 70.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 61.49% |
| Values | Daily Returns |
Sime Darby Bhd vs. Geely Automobile Holdings
Performance |
| Timeline |
| Sime Darby Bhd |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Geely Automobile Holdings |
Sime Darby and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sime Darby and Geely Automobile
The main advantage of trading using opposite Sime Darby and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sime Darby position performs unexpectedly, Geely Automobile 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 Geely Automobile will offset losses from the drop in Geely Automobile's long position.| Sime Darby vs. Zapp Electric Vehicles | Sime Darby vs. First Hydrogen Corp | Sime Darby vs. Guangzhou Automobile Group | Sime Darby vs. Phoenix Motor Common |
| Geely Automobile vs. Great Wall Motor | Geely Automobile vs. Polestar Automotive Holding | Geely Automobile vs. Dowlais Group plc | Geely Automobile vs. BYD Company Limited |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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