Correlation Between GEELY AUTOMOBILE and STRA Hannoversche

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

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

Diversification Opportunities for GEELY AUTOMOBILE and STRA Hannoversche

-0.71

Correlation Coefficient

GEELY AUTOMOBILE  STRA Hannoversche

Pay attention - limited upside

The 3 months correlation between GEELY and STRA is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and STRA Hannoversche Verkehrsbetr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRA Hannoversche 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 STRA Hannoversche. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRA Hannoversche has no effect on the direction of GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and STRA Hannoversche go up and down completely randomly.

Pair Corralation between GEELY AUTOMOBILE and STRA Hannoversche

Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to generate 0.61 times more return on investment than STRA Hannoversche. However, GEELY AUTOMOBILE is 1.63 times less risky than STRA Hannoversche. It trades about 0.07 of its potential returns per unit of risk. STRA Hannoversche Verkehrsbetriebe is currently generating about 0.01 per unit of risk. If you would invest  94.00  in GEELY AUTOMOBILE on September 17, 2024 and sell it today you would earn a total of  95.00  from holding GEELY AUTOMOBILE or generate 101.06% return on investment over 90 days.

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

GEELY AUTOMOBILE  vs.  STRA Hannoversche Verkehrsbetr

GEELY AUTOMOBILE

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GEELY AUTOMOBILE are ranked lower than 19 (%) 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.

STRA Hannoversche

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STRA Hannoversche Verkehrsbetriebe has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with GEELY AUTOMOBILE and STRA Hannoversche

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

The idea behind GEELY AUTOMOBILE and STRA Hannoversche Verkehrsbetriebe 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..