Correlation Between Geely Automobile and Fisker

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

Diversification Opportunities for Geely Automobile and Fisker

0.24

Correlation Coefficient

Geely Automobile  Fisker

Modest diversification

The 3 months correlation between Geely and Fisker is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and Fisker Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fisker Inc 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 Fisker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fisker Inc has no effect on the direction of Geely Automobile i.e., Geely Automobile and Fisker go up and down completely randomly.

Pair Corralation between Geely Automobile and Fisker

If you would invest  2,261  in Geely Automobile Holdings on September 3, 2024 and sell it today you would earn a total of  1,317  from holding Geely Automobile Holdings or generate 58.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Geely Automobile Holdings  vs.  Fisker Inc

Geely Automobile Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Geely Automobile Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Geely Automobile showed solid returns over the last few months and may actually be approaching a breakup point.

Fisker Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fisker Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Fisker is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Geely Automobile and Fisker

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

The idea behind Geely Automobile Holdings and Fisker Inc 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.