Correlation Between Fisker and Geely Automobile

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

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

Diversification Opportunities for Fisker and Geely Automobile

0.37

Correlation Coefficient

Fisker  Geely Automobile

Weak diversification

The 3 months correlation between Fisker and Geely is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Fisker Inc 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 Fisker 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 Fisker Inc 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 Fisker i.e., Fisker and Geely Automobile go up and down completely randomly.

Pair Corralation between Fisker and Geely Automobile

If you would invest  2,315  in Geely Automobile Holdings on September 12, 2024 and sell it today you would earn a total of  1,708  from holding Geely Automobile Holdings or generate 73.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Fisker Inc  vs.  Geely Automobile Holdings

Fisker Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fisker Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Fisker is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Geely Automobile Holdings

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Geely Automobile Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Geely Automobile showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fisker and Geely Automobile

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

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.