Correlation Between GEELY AUTOMOBILE and Sempra

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

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

Diversification Opportunities for GEELY AUTOMOBILE and Sempra

0.13

Correlation Coefficient

GEELY AUTOMOBILE  Sempra

Average diversification

The 3 months correlation between GEELY and Sempra is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and Sempra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sempra 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 Sempra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sempra has no effect on the direction of GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and Sempra go up and down completely randomly.

Pair Corralation between GEELY AUTOMOBILE and Sempra

Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to generate 2.04 times more return on investment than Sempra. However, GEELY AUTOMOBILE is 2.04 times more volatile than Sempra. It trades about 0.18 of its potential returns per unit of risk. Sempra is currently generating about 0.09 per unit of risk. If you would invest  94.00  in GEELY AUTOMOBILE on October 25, 2024 and sell it today you would earn a total of  82.00  from holding GEELY AUTOMOBILE or generate 87.23% return on investment over 90 days.

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

GEELY AUTOMOBILE  vs.  Sempra

GEELY AUTOMOBILE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEELY AUTOMOBILE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GEELY AUTOMOBILE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Sempra

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with GEELY AUTOMOBILE and Sempra

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

The idea behind GEELY AUTOMOBILE and Sempra 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.