Correlation Between Geely Automobile and Pick N

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

Diversification Opportunities for Geely Automobile and Pick N

0.7

Correlation Coefficient

Geely Automobile  Pick N

Poor diversification

The 3 months correlation between Geely and Pick is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and Pick n Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pick n Pay 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 Pick N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pick n Pay has no effect on the direction of Geely Automobile i.e., Geely Automobile and Pick N go up and down completely randomly.

Pair Corralation between Geely Automobile and Pick N

Assuming the 90 days horizon Geely Automobile is expected to generate 6.23 times less return on investment than Pick N. But when comparing it to its historical volatility, Geely Automobile Holdings is 11.07 times less risky than Pick N. It trades about 0.07 of its potential returns per unit of risk. Pick n Pay is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  310.00  in Pick n Pay on September 14, 2024 and sell it today you would lose (151.00) from holding Pick n Pay or give up 48.71% of portfolio value over 90 days.

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

Geely Automobile Holdings  vs.  Pick n Pay

Geely Automobile Holdings

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Geely Automobile Holdings are ranked lower than 20 (%) 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.

Pick n Pay

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pick n Pay are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pick N reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Geely Automobile and Pick N

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

The idea behind Geely Automobile Holdings and Pick n Pay 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.