Correlation Between Geely Automobile and MOBILE FACTORY

Can any of the company-specific risk be diversified away by investing in both Geely Automobile and MOBILE FACTORY 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 MOBILE FACTORY 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 MOBILE FACTORY INC, you can compare the effects of market volatilities on Geely Automobile and MOBILE FACTORY 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 MOBILE FACTORY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geely Automobile and MOBILE FACTORY.

Diversification Opportunities for Geely Automobile and MOBILE FACTORY

0.3

Correlation Coefficient

Geely Automobile  MOBILE FACTORY

Weak diversification

The 3 months correlation between Geely and MOBILE is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and MOBILE FACTORY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOBILE FACTORY INC 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 MOBILE FACTORY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOBILE FACTORY INC has no effect on the direction of Geely Automobile i.e., Geely Automobile and MOBILE FACTORY go up and down completely randomly.

Pair Corralation between Geely Automobile and MOBILE FACTORY

Assuming the 90 days horizon Geely Automobile Holdings is expected to generate 1.94 times more return on investment than MOBILE FACTORY. However, Geely Automobile is 1.94 times more volatile than MOBILE FACTORY INC. It trades about 0.07 of its potential returns per unit of risk. MOBILE FACTORY INC is currently generating about 0.02 per unit of risk. If you would invest  187.00  in Geely Automobile Holdings on December 21, 2024 and sell it today you would earn a total of  22.00  from holding Geely Automobile Holdings or generate 11.76% return on investment over 90 days.

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

Geely Automobile Holdings  vs.  MOBILE FACTORY INC

Geely Automobile Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Geely Automobile Holdings are ranked lower than 5 (%) 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.

MOBILE FACTORY INC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MOBILE FACTORY INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MOBILE FACTORY is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Geely Automobile and MOBILE FACTORY

The main advantage of trading using opposite Geely Automobile and MOBILE FACTORY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geely Automobile position performs unexpectedly, MOBILE FACTORY 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 MOBILE FACTORY will offset losses from the drop in MOBILE FACTORY's long position.

The idea behind Geely Automobile Holdings and MOBILE FACTORY INC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.