Correlation Between Geely Automobile and Beazer Homes

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

Diversification Opportunities for Geely Automobile and Beazer Homes

0.81

Correlation Coefficient

Geely Automobile  Beazer Homes

Very poor diversification

The 3 months correlation between Geely and Beazer is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and Beazer Homes USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beazer Homes USA 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 Beazer Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beazer Homes USA has no effect on the direction of Geely Automobile i.e., Geely Automobile and Beazer Homes go up and down completely randomly.

Pair Corralation between Geely Automobile and Beazer Homes

Assuming the 90 days horizon Geely Automobile Holdings is expected to generate 0.94 times more return on investment than Beazer Homes. However, Geely Automobile Holdings is 1.07 times less risky than Beazer Homes. It trades about 0.07 of its potential returns per unit of risk. Beazer Homes USA is currently generating about -0.01 per unit of risk. If you would invest  92.00  in Geely Automobile Holdings on April 20, 2025 and sell it today you would earn a total of  114.00  from holding Geely Automobile Holdings or generate 123.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Geely Automobile Holdings  vs.  Beazer Homes USA

Geely Automobile Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Geely Automobile Holdings are ranked lower than 13 (%) 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.

Beazer Homes USA

Risk-Adjusted Performance

Good

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

Pair Trading with Geely Automobile and Beazer Homes

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

The idea behind Geely Automobile Holdings and Beazer Homes USA 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.