Correlation Between CARSALES and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both CARSALES 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 CARSALES and Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARSALESCOM and Geely Automobile Holdings, you can compare the effects of market volatilities on CARSALES 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 CARSALES with a short position of Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARSALES and Geely Automobile.
Diversification Opportunities for CARSALES and Geely Automobile
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CARSALES and Geely is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM 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 CARSALES 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 CARSALESCOM 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 CARSALES i.e., CARSALES and Geely Automobile go up and down completely randomly.
Pair Corralation between CARSALES and Geely Automobile
Assuming the 90 days trading horizon CARSALESCOM is expected to generate 0.49 times more return on investment than Geely Automobile. However, CARSALESCOM is 2.05 times less risky than Geely Automobile. It trades about 0.42 of its potential returns per unit of risk. Geely Automobile Holdings is currently generating about -0.1 per unit of risk. If you would invest 2,280 in CARSALESCOM on August 31, 2024 and sell it today you would earn a total of 300.00 from holding CARSALESCOM or generate 13.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CARSALESCOM vs. Geely Automobile Holdings
Performance |
| Timeline |
| CARSALESCOM |
| Geely Automobile Holdings |
CARSALES and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARSALES and Geely Automobile
The main advantage of trading using opposite CARSALES and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALES 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.| CARSALES vs. Data3 Limited | CARSALES vs. Hyrican Informationssysteme Aktiengesellschaft | CARSALES vs. COMMERCIAL VEHICLE | CARSALES vs. PUBLIC STORAGE PRFO |
| Geely Automobile vs. NORWEGIAN AIR SHUT | Geely Automobile vs. Penta Ocean Construction Co | Geely Automobile vs. DAIRY FARM INTL | Geely Automobile vs. Ryanair Holdings plc |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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