Correlation Between SCIENCE IN and Geely Automobile

Can any of the company-specific risk be diversified away by investing in both SCIENCE IN 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 SCIENCE IN and Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SCIENCE IN SPORT and Geely Automobile Holdings, you can compare the effects of market volatilities on SCIENCE IN 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 SCIENCE IN with a short position of Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCIENCE IN and Geely Automobile.

Diversification Opportunities for SCIENCE IN and Geely Automobile

0.63

Correlation Coefficient

SCIENCE IN  Geely Automobile

Poor diversification

The 3 months correlation between SCIENCE and Geely is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding SCIENCE IN SPORT 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 SCIENCE IN 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 SCIENCE IN SPORT 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 SCIENCE IN i.e., SCIENCE IN and Geely Automobile go up and down completely randomly.

Pair Corralation between SCIENCE IN and Geely Automobile

Assuming the 90 days horizon SCIENCE IN is expected to generate 2.05 times less return on investment than Geely Automobile. In addition to that, SCIENCE IN is 2.82 times more volatile than Geely Automobile Holdings. It trades about 0.01 of its total potential returns per unit of risk. Geely Automobile Holdings is currently generating about 0.06 per unit of volatility. If you would invest  175.00  in Geely Automobile Holdings on October 5, 2024 and sell it today you would earn a total of  4.00  from holding Geely Automobile Holdings or generate 2.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

SCIENCE IN SPORT  vs.  Geely Automobile Holdings

SCIENCE IN SPORT

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days SCIENCE IN SPORT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, SCIENCE IN may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Geely Automobile Holdings

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Geely Automobile Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Geely Automobile reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SCIENCE IN and Geely Automobile

The main advantage of trading using opposite SCIENCE IN and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCIENCE IN 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.

The idea behind SCIENCE IN SPORT and Geely Automobile Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.