Correlation Between GEELY AUTOMOBILE and Wolters Kluwers

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

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

Diversification Opportunities for GEELY AUTOMOBILE and Wolters Kluwers

0.42

Correlation Coefficient

GEELY AUTOMOBILE  Wolters Kluwers

Very weak diversification

The 3 months correlation between GEELY and Wolters is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and Wolters Kluwers Nv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wolters Kluwers Nv 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 Wolters Kluwers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wolters Kluwers Nv has no effect on the direction of GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and Wolters Kluwers go up and down completely randomly.

Pair Corralation between GEELY AUTOMOBILE and Wolters Kluwers

Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to generate 1.81 times more return on investment than Wolters Kluwers. However, GEELY AUTOMOBILE is 1.81 times more volatile than Wolters Kluwers Nv. It trades about 0.06 of its potential returns per unit of risk. Wolters Kluwers Nv is currently generating about 0.09 per unit of risk. If you would invest  95.00  in GEELY AUTOMOBILE on October 26, 2024 and sell it today you would earn a total of  80.00  from holding GEELY AUTOMOBILE or generate 84.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.82%
Values	Daily Returns

GEELY AUTOMOBILE  vs.  Wolters Kluwers Nv

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.

Wolters Kluwers Nv

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wolters Kluwers Nv are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Wolters Kluwers is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GEELY AUTOMOBILE and Wolters Kluwers

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

The idea behind GEELY AUTOMOBILE and Wolters Kluwers Nv 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.