Correlation Between GX AI and Honda
Can any of the company-specific risk be diversified away by investing in both GX AI and Honda 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 GX AI and Honda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GX AI TECH and Honda Motor Co, you can compare the effects of market volatilities on GX AI and Honda 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 GX AI with a short position of Honda. Check out your portfolio center. Please also check ongoing floating volatility patterns of GX AI and Honda.
Diversification Opportunities for GX AI and Honda
Very good diversification
The 3 months correlation between BAIQ39 and Honda is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding GX AI TECH and Honda Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honda Motor and GX AI 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 GX AI TECH are associated (or correlated) with Honda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honda Motor has no effect on the direction of GX AI i.e., GX AI and Honda go up and down completely randomly.
Pair Corralation between GX AI and Honda
Assuming the 90 days trading horizon GX AI is expected to generate 17.73 times less return on investment than Honda. In addition to that, GX AI is 1.22 times more volatile than Honda Motor Co. It trades about 0.01 of its total potential returns per unit of risk. Honda Motor Co is currently generating about 0.22 per unit of volatility. If you would invest 15,696 in Honda Motor Co on October 12, 2024 and sell it today you would earn a total of 2,553 from holding Honda Motor Co or generate 16.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GX AI TECH vs. Honda Motor Co
Performance |
| Timeline |
| GX AI TECH |
| Honda Motor |
GX AI and Honda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GX AI and Honda
The main advantage of trading using opposite GX AI and Honda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GX AI position performs unexpectedly, Honda 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 Honda will offset losses from the drop in Honda's long position.| GX AI vs. Taiwan Semiconductor Manufacturing | GX AI vs. Apple Inc | GX AI vs. Alibaba Group Holding | GX AI vs. Banco Santander Chile |
| Honda vs. Apartment Investment and | Honda vs. GX AI TECH | Honda vs. Marvell Technology | Honda vs. Taiwan Semiconductor Manufacturing |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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