Correlation Between GM and ChengDu Hi-Tech
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By analyzing existing cross correlation between General Motors and ChengDu Hi Tech Development, you can compare the effects of market volatilities on GM and ChengDu Hi-Tech 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 ChengDu Hi-Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and ChengDu Hi-Tech.
Diversification Opportunities for GM and ChengDu Hi-Tech
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GM and ChengDu is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and ChengDu Hi Tech Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChengDu Hi Tech 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 ChengDu Hi-Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChengDu Hi Tech has no effect on the direction of GM i.e., GM and ChengDu Hi-Tech go up and down completely randomly.
Pair Corralation between GM and ChengDu Hi-Tech
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the ChengDu Hi-Tech. In addition to that, GM is 1.1 times more volatile than ChengDu Hi Tech Development. It trades about -0.13 of its total potential returns per unit of risk. ChengDu Hi Tech Development is currently generating about 0.17 per unit of volatility. If you would invest 5,045 in ChengDu Hi Tech Development on November 5, 2024 and sell it today you would earn a total of 370.00 from holding ChengDu Hi Tech Development or generate 7.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 89.47% |
| Values | Daily Returns |
General Motors vs. ChengDu Hi Tech Development
Performance |
| Timeline |
| General Motors |
| ChengDu Hi Tech |
GM and ChengDu Hi-Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and ChengDu Hi-Tech
The main advantage of trading using opposite GM and ChengDu Hi-Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, ChengDu Hi-Tech 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 ChengDu Hi-Tech will offset losses from the drop in ChengDu Hi-Tech's long position.The idea behind General Motors and ChengDu Hi Tech Development 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.| ChengDu Hi-Tech vs. Sichuan Hebang Biotechnology | ChengDu Hi-Tech vs. Bank of Communications | ChengDu Hi-Tech vs. Wuhan Yangtze Communication | ChengDu Hi-Tech vs. Anhui Huaheng Biotechnology |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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