Correlation Between Geely Automobile and Computershare

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

Diversification Opportunities for Geely Automobile and Computershare

0.47

Correlation Coefficient

Geely Automobile  Computershare

Very weak diversification

The 3 months correlation between Geely and Computershare is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and Computershare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computershare Limited 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 Computershare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computershare Limited has no effect on the direction of Geely Automobile i.e., Geely Automobile and Computershare go up and down completely randomly.

Pair Corralation between Geely Automobile and Computershare

Assuming the 90 days horizon Geely Automobile Holdings is expected to generate 1.96 times more return on investment than Computershare. However, Geely Automobile is 1.96 times more volatile than Computershare Limited. It trades about 0.17 of its potential returns per unit of risk. Computershare Limited is currently generating about 0.09 per unit of risk. If you would invest  152.00  in Geely Automobile Holdings on April 20, 2025 and sell it today you would earn a total of  54.00  from holding Geely Automobile Holdings or generate 35.53% 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.  Computershare Limited

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.

Computershare Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Computershare Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Computershare may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Geely Automobile and Computershare

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

The idea behind Geely Automobile Holdings and Computershare Limited 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.