Correlation Between GEELY AUTOMOBILE and Takara Holdings

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

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

Diversification Opportunities for GEELY AUTOMOBILE and Takara Holdings

0.18

Correlation Coefficient

GEELY AUTOMOBILE  Takara Holdings

Average diversification

The 3 months correlation between GEELY and Takara is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and Takara Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Takara Holdings 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 Takara Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Takara Holdings has no effect on the direction of GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and Takara Holdings go up and down completely randomly.

Pair Corralation between GEELY AUTOMOBILE and Takara Holdings

Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to generate 1.29 times less return on investment than Takara Holdings. In addition to that, GEELY AUTOMOBILE is 1.79 times more volatile than Takara Holdings. It trades about 0.07 of its total potential returns per unit of risk. Takara Holdings is currently generating about 0.17 per unit of volatility. If you would invest  685.00  in Takara Holdings on October 24, 2024 and sell it today you would earn a total of  110.00  from holding Takara Holdings or generate 16.06% 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.  Takara Holdings

GEELY AUTOMOBILE

Risk-Adjusted Performance

5 of 100

Modest

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

Takara Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Takara Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Takara Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GEELY AUTOMOBILE and Takara Holdings

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

The idea behind GEELY AUTOMOBILE and Takara Holdings 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.