Correlation Between Westinghouse Air and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air 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 Westinghouse Air and Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westinghouse Air Brake and Geely Automobile Holdings, you can compare the effects of market volatilities on Westinghouse Air 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 Westinghouse Air with a short position of Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Geely Automobile.
Diversification Opportunities for Westinghouse Air and Geely Automobile
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Westinghouse and Geely is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake 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 Westinghouse Air 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 Westinghouse Air Brake 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 Westinghouse Air i.e., Westinghouse Air and Geely Automobile go up and down completely randomly.
Pair Corralation between Westinghouse Air and Geely Automobile
Assuming the 90 days horizon Westinghouse Air is expected to generate 1.99 times less return on investment than Geely Automobile. But when comparing it to its historical volatility, Westinghouse Air Brake is 2.75 times less risky than Geely Automobile. It trades about 0.28 of its potential returns per unit of risk. Geely Automobile Holdings is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 98.00 in Geely Automobile Holdings on August 28, 2024 and sell it today you would earn a total of 59.00 from holding Geely Automobile Holdings or generate 60.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Geely Automobile Holdings
Performance |
| Timeline |
| Westinghouse Air Brake |
| Geely Automobile Holdings |
Westinghouse Air and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Geely Automobile
The main advantage of trading using opposite Westinghouse Air and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air 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.| Westinghouse Air vs. Datang International Power | Westinghouse Air vs. Datadog | Westinghouse Air vs. LION ONE METALS | Westinghouse Air vs. KENNAMETAL INC |
| Geely Automobile vs. Superior Plus Corp | Geely Automobile vs. NMI Holdings | Geely Automobile vs. Origin Agritech | Geely Automobile vs. SIVERS SEMICONDUCTORS AB |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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