Correlation Between GEELY AUTOMOBILE and Hitachi Zosen

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

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

Diversification Opportunities for GEELY AUTOMOBILE and Hitachi Zosen

-0.43

Correlation Coefficient

GEELY AUTOMOBILE  Hitachi Zosen

Very good diversification

The 3 months correlation between GEELY and Hitachi is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and Hitachi Zosen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Zosen 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 Hitachi Zosen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi Zosen has no effect on the direction of GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and Hitachi Zosen go up and down completely randomly.

Pair Corralation between GEELY AUTOMOBILE and Hitachi Zosen

Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to generate 1.52 times more return on investment than Hitachi Zosen. However, GEELY AUTOMOBILE is 1.52 times more volatile than Hitachi Zosen. It trades about 0.07 of its potential returns per unit of risk. Hitachi Zosen is currently generating about 0.05 per unit of risk. If you would invest  186.00  in GEELY AUTOMOBILE on December 21, 2024 and sell it today you would earn a total of  20.00  from holding GEELY AUTOMOBILE or generate 10.75% 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.  Hitachi Zosen

GEELY AUTOMOBILE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GEELY AUTOMOBILE are ranked lower than 5 (%) 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.

Hitachi Zosen

Risk-Adjusted Performance

Insignificant

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

Pair Trading with GEELY AUTOMOBILE and Hitachi Zosen

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

The idea behind GEELY AUTOMOBILE and Hitachi Zosen 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.