Correlation Between GEELY AUTOMOBILE and Sino Land

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

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

Diversification Opportunities for GEELY AUTOMOBILE and Sino Land

0.79

Correlation Coefficient

GEELY AUTOMOBILE  Sino Land

Poor diversification

The 3 months correlation between GEELY and Sino is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and Sino Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino Land 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 Sino Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino Land has no effect on the direction of GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and Sino Land go up and down completely randomly.

Pair Corralation between GEELY AUTOMOBILE and Sino Land

Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to generate 1.59 times more return on investment than Sino Land. However, GEELY AUTOMOBILE is 1.59 times more volatile than Sino Land. It trades about 0.01 of its potential returns per unit of risk. Sino Land is currently generating about -0.03 per unit of risk. If you would invest  176.00  in GEELY AUTOMOBILE on October 5, 2024 and sell it today you would earn a total of  0.00  from holding GEELY AUTOMOBILE or generate 0.0% return on investment over 90 days.

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

GEELY AUTOMOBILE  vs.  Sino Land

GEELY AUTOMOBILE

Risk-Adjusted Performance

0 of 100

Modest

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 uncertain basic indicators, GEELY AUTOMOBILE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sino Land

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Sino Land has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, Sino Land reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GEELY AUTOMOBILE and Sino Land

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

The idea behind GEELY AUTOMOBILE and Sino Land 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.