Correlation Between BROADWIND ENRGY and GEELY AUTOMOBILE

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

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

Diversification Opportunities for BROADWIND ENRGY and GEELY AUTOMOBILE

-0.51

Correlation Coefficient

BROADWIND ENRGY  GEELY AUTOMOBILE

Excellent diversification

The 3 months correlation between BROADWIND and GEELY is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding BROADWIND ENRGY and GEELY AUTOMOBILE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEELY AUTOMOBILE and BROADWIND ENRGY 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 BROADWIND ENRGY are associated (or correlated) with GEELY AUTOMOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEELY AUTOMOBILE has no effect on the direction of BROADWIND ENRGY i.e., BROADWIND ENRGY and GEELY AUTOMOBILE go up and down completely randomly.

Pair Corralation between BROADWIND ENRGY and GEELY AUTOMOBILE

Assuming the 90 days trading horizon BROADWIND ENRGY is expected to generate 6.62 times less return on investment than GEELY AUTOMOBILE. In addition to that, BROADWIND ENRGY is 1.49 times more volatile than GEELY AUTOMOBILE. It trades about 0.01 of its total potential returns per unit of risk. GEELY AUTOMOBILE is currently generating about 0.13 per unit of volatility. If you would invest  74.00  in GEELY AUTOMOBILE on September 4, 2024 and sell it today you would earn a total of  102.00  from holding GEELY AUTOMOBILE or generate 137.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BROADWIND ENRGY  vs.  GEELY AUTOMOBILE

BROADWIND ENRGY

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BROADWIND ENRGY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BROADWIND ENRGY is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

GEELY AUTOMOBILE

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GEELY AUTOMOBILE are ranked lower than 17 (%) 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.

Pair Trading with BROADWIND ENRGY and GEELY AUTOMOBILE

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

The idea behind BROADWIND ENRGY and GEELY AUTOMOBILE 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.