Correlation Between Geely Automobile and Atea ASA

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

Diversification Opportunities for Geely Automobile and Atea ASA

-0.54

Correlation Coefficient

Geely Automobile  Atea ASA

Excellent diversification

The 3 months correlation between Geely and Atea is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and Atea ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atea ASA 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 Atea ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atea ASA has no effect on the direction of Geely Automobile i.e., Geely Automobile and Atea ASA go up and down completely randomly.

Pair Corralation between Geely Automobile and Atea ASA

Assuming the 90 days horizon Geely Automobile Holdings is expected to generate 2.66 times more return on investment than Atea ASA. However, Geely Automobile is 2.66 times more volatile than Atea ASA. It trades about 0.06 of its potential returns per unit of risk. Atea ASA is currently generating about 0.01 per unit of risk. If you would invest  190.00  in Geely Automobile Holdings on December 19, 2024 and sell it today you would earn a total of  17.00  from holding Geely Automobile Holdings or generate 8.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Geely Automobile Holdings  vs.  Atea ASA

Geely Automobile Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Geely Automobile Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Geely Automobile may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Atea ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atea ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Atea ASA is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Geely Automobile and Atea ASA

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

The idea behind Geely Automobile Holdings and Atea ASA 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.