Correlation Between GM and Luxi Chemical
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By analyzing existing cross correlation between General Motors and Luxi Chemical Group, you can compare the effects of market volatilities on GM and Luxi Chemical 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 Luxi Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Luxi Chemical.
Diversification Opportunities for GM and Luxi Chemical
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Luxi is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Luxi Chemical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luxi Chemical Group 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 Luxi Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luxi Chemical Group has no effect on the direction of GM i.e., GM and Luxi Chemical go up and down completely randomly.
Pair Corralation between GM and Luxi Chemical
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.55 times more return on investment than Luxi Chemical. However, GM is 1.55 times more volatile than Luxi Chemical Group. It trades about 0.09 of its potential returns per unit of risk. Luxi Chemical Group is currently generating about -0.06 per unit of risk. If you would invest 5,273 in General Motors on August 29, 2024 and sell it today you would earn a total of 277.00 from holding General Motors or generate 5.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Luxi Chemical Group
Performance |
| Timeline |
| General Motors |
| Luxi Chemical Group |
GM and Luxi Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Luxi Chemical
The main advantage of trading using opposite GM and Luxi Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Luxi Chemical 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 Luxi Chemical will offset losses from the drop in Luxi Chemical's long position.The idea behind General Motors and Luxi Chemical Group 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.| Luxi Chemical vs. Nanjing Medlander Medical | Luxi Chemical vs. Allmed Medical Products | Luxi Chemical vs. Touchstone International Medical | Luxi Chemical vs. Xingguang Agricultural Mach |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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