Correlation Between GM and Beijing Mainstreets
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By analyzing existing cross correlation between General Motors and Beijing Mainstreets Investment, you can compare the effects of market volatilities on GM and Beijing Mainstreets 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 GM with a short position of Beijing Mainstreets. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Beijing Mainstreets.
Diversification Opportunities for GM and Beijing Mainstreets
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GM and Beijing is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Beijing Mainstreets Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Mainstreets and GM 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 General Motors are associated (or correlated) with Beijing Mainstreets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Mainstreets has no effect on the direction of GM i.e., GM and Beijing Mainstreets go up and down completely randomly.
Pair Corralation between GM and Beijing Mainstreets
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.45 times more return on investment than Beijing Mainstreets. However, General Motors is 2.23 times less risky than Beijing Mainstreets. It trades about 0.07 of its potential returns per unit of risk. Beijing Mainstreets Investment is currently generating about -0.02 per unit of risk. If you would invest 3,536 in General Motors on August 31, 2024 and sell it today you would earn a total of 2,023 from holding General Motors or generate 57.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.99% |
| Values | Daily Returns |
General Motors vs. Beijing Mainstreets Investment
Performance |
| Timeline |
| General Motors |
| Beijing Mainstreets |
GM and Beijing Mainstreets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Beijing Mainstreets
The main advantage of trading using opposite GM and Beijing Mainstreets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Beijing Mainstreets 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 Beijing Mainstreets will offset losses from the drop in Beijing Mainstreets' long position.The idea behind General Motors and Beijing Mainstreets Investment 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.| Beijing Mainstreets vs. Kweichow Moutai Co | Beijing Mainstreets vs. Contemporary Amperex Technology | Beijing Mainstreets vs. G bits Network Technology | Beijing Mainstreets vs. BYD Co Ltd |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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