Correlation Between Autodesk and GEELY AUTOMOBILE

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

By analyzing existing cross correlation between Autodesk and GEELY AUTOMOBILE, you can compare the effects of market volatilities on Autodesk 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 Autodesk with a short position of GEELY AUTOMOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autodesk and GEELY AUTOMOBILE.

Diversification Opportunities for Autodesk and GEELY AUTOMOBILE

0.35

Correlation Coefficient

Autodesk  GEELY AUTOMOBILE

Weak diversification

The 3 months correlation between Autodesk and GEELY is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Autodesk and GEELY AUTOMOBILE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEELY AUTOMOBILE and Autodesk 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 Autodesk 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 has no effect on the direction of Autodesk i.e., Autodesk and GEELY AUTOMOBILE go up and down completely randomly.

Pair Corralation between Autodesk and GEELY AUTOMOBILE

Assuming the 90 days horizon Autodesk is expected to generate 0.76 times more return on investment than GEELY AUTOMOBILE. However, Autodesk is 1.32 times less risky than GEELY AUTOMOBILE. It trades about -0.07 of its potential returns per unit of risk. GEELY AUTOMOBILE is currently generating about -0.15 per unit of risk. If you would invest  28,630  in Autodesk on October 23, 2024 and sell it today you would lose (435.00) from holding Autodesk or give up 1.52% of portfolio value over 90 days.

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

Autodesk  vs.  GEELY AUTOMOBILE

Autodesk

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Autodesk are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Autodesk may actually be approaching a critical reversion point that can send shares even higher in February 2025.

GEELY AUTOMOBILE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GEELY AUTOMOBILE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, GEELY AUTOMOBILE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Autodesk and GEELY AUTOMOBILE

The main advantage of trading using opposite Autodesk and GEELY AUTOMOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autodesk 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 Autodesk and GEELY AUTOMOBILE 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.