Correlation Between Geely Automobile and TAL Education
Can any of the company-specific risk be diversified away by investing in both Geely Automobile and TAL Education 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 TAL Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geely Automobile Holdings and TAL Education Group, you can compare the effects of market volatilities on Geely Automobile and TAL Education 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 TAL Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geely Automobile and TAL Education.
Diversification Opportunities for Geely Automobile and TAL Education
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Geely and TAL is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and TAL Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAL Education Group 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 Holdings are associated (or correlated) with TAL Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAL Education Group has no effect on the direction of Geely Automobile i.e., Geely Automobile and TAL Education go up and down completely randomly.
Pair Corralation between Geely Automobile and TAL Education
Assuming the 90 days horizon Geely Automobile Holdings is expected to generate 0.89 times more return on investment than TAL Education. However, Geely Automobile Holdings is 1.13 times less risky than TAL Education. It trades about 0.17 of its potential returns per unit of risk. TAL Education Group is currently generating about 0.09 per unit of risk. If you would invest 128.00 in Geely Automobile Holdings on September 24, 2024 and sell it today you would earn a total of 61.00 from holding Geely Automobile Holdings or generate 47.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Geely Automobile Holdings vs. TAL Education Group
Performance |
Timeline |
Geely Automobile Holdings |
TAL Education Group |
Geely Automobile and TAL Education Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Geely Automobile and TAL Education
The main advantage of trading using opposite Geely Automobile and TAL Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geely Automobile position performs unexpectedly, TAL Education 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 TAL Education will offset losses from the drop in TAL Education's long position.Geely Automobile vs. Tesla Inc | Geely Automobile vs. Toyota Motor | Geely Automobile vs. BYD Company Limited | Geely Automobile vs. MERCEDES BENZ GRP ADR14 |
TAL Education vs. INDOFOOD AGRI RES | TAL Education vs. Geely Automobile Holdings | TAL Education vs. Dairy Farm International | TAL Education vs. COMMERCIAL VEHICLE |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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