Correlation Between BJs Restaurants and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants 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 BJs Restaurants and Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Geely Automobile Holdings, you can compare the effects of market volatilities on BJs Restaurants 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 BJs Restaurants with a short position of Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Geely Automobile.
Diversification Opportunities for BJs Restaurants and Geely Automobile
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BJs and Geely is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants 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 BJs Restaurants 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 BJs Restaurants 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 BJs Restaurants i.e., BJs Restaurants and Geely Automobile go up and down completely randomly.
Pair Corralation between BJs Restaurants and Geely Automobile
Assuming the 90 days trading horizon BJs Restaurants is expected to generate 3.18 times less return on investment than Geely Automobile. But when comparing it to its historical volatility, BJs Restaurants is 1.07 times less risky than Geely Automobile. It trades about 0.03 of its potential returns per unit of risk. Geely Automobile Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 75.00 in Geely Automobile Holdings on November 29, 2024 and sell it today you would earn a total of 145.00 from holding Geely Automobile Holdings or generate 193.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. Geely Automobile Holdings
Performance |
| Timeline |
| BJs Restaurants |
| Geely Automobile Holdings |
BJs Restaurants and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Geely Automobile
The main advantage of trading using opposite BJs Restaurants and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants 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.| BJs Restaurants vs. QLEANAIR AB SK 50 | BJs Restaurants vs. Air Lease | BJs Restaurants vs. RYANAIR HLDGS ADR | BJs Restaurants vs. Sixt Leasing SE |
| Geely Automobile vs. SPORT LISBOA E | Geely Automobile vs. MICRONIC MYDATA | Geely Automobile vs. PARKEN SPORT ENT | Geely Automobile vs. Cass Information Systems |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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