Correlation Between Geely Automobile and COFCO Joycome

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Can any of the company-specific risk be diversified away by investing in both Geely Automobile and COFCO Joycome 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 Geely Automobile and COFCO Joycome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geely Automobile Holdings and COFCO Joycome Foods, you can compare the effects of market volatilities on Geely Automobile and COFCO Joycome 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 Geely Automobile with a short position of COFCO Joycome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geely Automobile and COFCO Joycome.

Diversification Opportunities for Geely Automobile and COFCO Joycome

GeelyCOFCODiversified AwayGeelyCOFCODiversified Away100%
-0.05
  Correlation Coefficient

Good diversification

The 3 months correlation between Geely and COFCO is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and COFCO Joycome Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COFCO Joycome Foods and Geely Automobile 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 Geely Automobile Holdings are associated (or correlated) with COFCO Joycome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COFCO Joycome Foods has no effect on the direction of Geely Automobile i.e., Geely Automobile and COFCO Joycome go up and down completely randomly.

Pair Corralation between Geely Automobile and COFCO Joycome

Assuming the 90 days horizon Geely Automobile Holdings is expected to generate 1.25 times more return on investment than COFCO Joycome. However, Geely Automobile is 1.25 times more volatile than COFCO Joycome Foods. It trades about 0.13 of its potential returns per unit of risk. COFCO Joycome Foods is currently generating about -0.03 per unit of risk. If you would invest  168.00  in Geely Automobile Holdings on November 18, 2024 and sell it today you would earn a total of  41.00  from holding Geely Automobile Holdings or generate 24.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Geely Automobile Holdings  vs.  COFCO Joycome Foods

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-505101520
JavaScript chart by amCharts 3.21.15GRU 0M7
       Timeline  
Geely Automobile Holdings 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Geely Automobile Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Geely Automobile reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1.61.71.81.922.12.2
COFCO Joycome Foods 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days COFCO Joycome Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, COFCO Joycome is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.160.1650.170.1750.18

Geely Automobile and COFCO Joycome Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.02-7.51-4.99-2.470.02.65.247.8910.53 0.020.030.040.05
JavaScript chart by amCharts 3.21.15GRU 0M7
       Returns  

Pair Trading with Geely Automobile and COFCO Joycome

The main advantage of trading using opposite Geely Automobile and COFCO Joycome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geely Automobile position performs unexpectedly, COFCO Joycome 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 COFCO Joycome will offset losses from the drop in COFCO Joycome's long position.
The idea behind Geely Automobile Holdings and COFCO Joycome Foods 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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