Correlation Between Geely Automobile and GungHo Online
Can any of the company-specific risk be diversified away by investing in both Geely Automobile and GungHo Online 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 GungHo Online 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 GungHo Online Entertainment, you can compare the effects of market volatilities on Geely Automobile and GungHo Online 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 GungHo Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geely Automobile and GungHo Online.
Diversification Opportunities for Geely Automobile and GungHo Online
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Geely and GungHo is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and GungHo Online Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GungHo Online Entert 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 GungHo Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GungHo Online Entert has no effect on the direction of Geely Automobile i.e., Geely Automobile and GungHo Online go up and down completely randomly.
Pair Corralation between Geely Automobile and GungHo Online
Assuming the 90 days horizon Geely Automobile Holdings is expected to generate 1.38 times more return on investment than GungHo Online. However, Geely Automobile is 1.38 times more volatile than GungHo Online Entertainment. It trades about 0.31 of its potential returns per unit of risk. GungHo Online Entertainment is currently generating about 0.18 per unit of risk. If you would invest 158.00 in Geely Automobile Holdings on September 25, 2024 and sell it today you would earn a total of 31.00 from holding Geely Automobile Holdings or generate 19.62% 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. GungHo Online Entertainment
Performance |
Timeline |
Geely Automobile Holdings |
GungHo Online Entert |
Geely Automobile and GungHo Online Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Geely Automobile and GungHo Online
The main advantage of trading using opposite Geely Automobile and GungHo Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geely Automobile position performs unexpectedly, GungHo Online 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 GungHo Online will offset losses from the drop in GungHo Online's long position.Geely Automobile vs. Tesla Inc | Geely Automobile vs. Toyota Motor | Geely Automobile vs. BYD Company Limited | Geely Automobile vs. MERCEDES BENZ GRP ADR14 |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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