Correlation Between Geely Automobile and Fortune Minerals

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

Diversification Opportunities for Geely Automobile and Fortune Minerals

-0.3

Correlation Coefficient

Geely Automobile  Fortune Minerals

Very good diversification

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

Pair Corralation between Geely Automobile and Fortune Minerals

Assuming the 90 days horizon Geely Automobile is expected to generate 1.63 times less return on investment than Fortune Minerals. But when comparing it to its historical volatility, Geely Automobile Holdings is 4.45 times less risky than Fortune Minerals. It trades about 0.13 of its potential returns per unit of risk. Fortune Minerals Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2.55  in Fortune Minerals Limited on October 8, 2024 and sell it today you would lose (0.65) from holding Fortune Minerals Limited or give up 25.49% of portfolio value over 90 days.

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

Geely Automobile Holdings  vs.  Fortune Minerals Limited

Geely Automobile Holdings

Risk-Adjusted Performance

10 of 100

OK

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 fragile basic indicators, Geely Automobile reported solid returns over the last few months and may actually be approaching a breakup point.

Fortune Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Geely Automobile and Fortune Minerals

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

The idea behind Geely Automobile Holdings and Fortune Minerals Limited 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.