Correlation Between GEELY AUTOMOBILE and Engie SA

Can any of the company-specific risk be diversified away by investing in both GEELY AUTOMOBILE and Engie SA 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 Engie SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GEELY AUTOMOBILE and Engie SA, you can compare the effects of market volatilities on GEELY AUTOMOBILE and Engie SA 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 Engie SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEELY AUTOMOBILE and Engie SA.

Diversification Opportunities for GEELY AUTOMOBILE and Engie SA

-0.59

Correlation Coefficient

GEELY AUTOMOBILE  Engie SA

Excellent diversification

The 3 months correlation between GEELY and Engie is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and Engie SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie SA 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 are associated (or correlated) with Engie SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie SA has no effect on the direction of GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and Engie SA go up and down completely randomly.

Pair Corralation between GEELY AUTOMOBILE and Engie SA

Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to under-perform the Engie SA. In addition to that, GEELY AUTOMOBILE is 1.64 times more volatile than Engie SA. It trades about -0.31 of its total potential returns per unit of risk. Engie SA is currently generating about 0.24 per unit of volatility. If you would invest  1,509  in Engie SA on October 11, 2024 and sell it today you would earn a total of  65.00  from holding Engie SA or generate 4.31% return on investment over 90 days.

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

GEELY AUTOMOBILE  vs.  Engie SA

GEELY AUTOMOBILE

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GEELY AUTOMOBILE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GEELY AUTOMOBILE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Engie SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Engie SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Engie SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GEELY AUTOMOBILE and Engie SA

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

The idea behind GEELY AUTOMOBILE and Engie SA 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.