Correlation Between Geely Automobile and Wilh Wilhelmsen

Can any of the company-specific risk be diversified away by investing in both Geely Automobile and Wilh Wilhelmsen 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 Wilh Wilhelmsen 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 Wilh Wilhelmsen Holding, you can compare the effects of market volatilities on Geely Automobile and Wilh Wilhelmsen 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 Wilh Wilhelmsen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geely Automobile and Wilh Wilhelmsen.

Diversification Opportunities for Geely Automobile and Wilh Wilhelmsen

0.45

Correlation Coefficient

Geely Automobile  Wilh Wilhelmsen

Very weak diversification

The 3 months correlation between Geely and Wilh is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and Wilh Wilhelmsen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilh Wilhelmsen Holding 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 Wilh Wilhelmsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilh Wilhelmsen Holding has no effect on the direction of Geely Automobile i.e., Geely Automobile and Wilh Wilhelmsen go up and down completely randomly.

Pair Corralation between Geely Automobile and Wilh Wilhelmsen

Assuming the 90 days horizon Geely Automobile is expected to generate 2.16 times less return on investment than Wilh Wilhelmsen. But when comparing it to its historical volatility, Geely Automobile Holdings is 1.29 times less risky than Wilh Wilhelmsen. It trades about 0.06 of its potential returns per unit of risk. Wilh Wilhelmsen Holding is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  737.00  in Wilh Wilhelmsen Holding on September 26, 2024 and sell it today you would earn a total of  2,483  from holding Wilh Wilhelmsen Holding or generate 336.91% 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.  Wilh Wilhelmsen Holding

Geely Automobile Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Geely Automobile Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Geely Automobile reported solid returns over the last few months and may actually be approaching a breakup point.

Wilh Wilhelmsen Holding

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wilh Wilhelmsen Holding are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Wilh Wilhelmsen reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Geely Automobile and Wilh Wilhelmsen

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

The idea behind Geely Automobile Holdings and Wilh Wilhelmsen Holding 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 Global Correlations module to find global opportunities by holding instruments from different markets.