Correlation Between GM and Sichuan Fulin
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By analyzing existing cross correlation between General Motors and Sichuan Fulin Transportation, you can compare the effects of market volatilities on GM and Sichuan Fulin 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 Sichuan Fulin. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Sichuan Fulin.
Diversification Opportunities for GM and Sichuan Fulin
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GM and Sichuan is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Sichuan Fulin Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Fulin Transp 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 Sichuan Fulin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Fulin Transp has no effect on the direction of GM i.e., GM and Sichuan Fulin go up and down completely randomly.
Pair Corralation between GM and Sichuan Fulin
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.73 times more return on investment than Sichuan Fulin. However, General Motors is 1.37 times less risky than Sichuan Fulin. It trades about 0.05 of its potential returns per unit of risk. Sichuan Fulin Transportation is currently generating about 0.02 per unit of risk. If you would invest 3,749 in General Motors on August 29, 2024 and sell it today you would earn a total of 1,730 from holding General Motors or generate 46.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.17% |
| Values | Daily Returns |
General Motors vs. Sichuan Fulin Transportation
Performance |
| Timeline |
| General Motors |
| Sichuan Fulin Transp |
GM and Sichuan Fulin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Sichuan Fulin
The main advantage of trading using opposite GM and Sichuan Fulin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Sichuan Fulin 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 Sichuan Fulin will offset losses from the drop in Sichuan Fulin's long position.The idea behind General Motors and Sichuan Fulin Transportation 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.| Sichuan Fulin vs. PetroChina Co Ltd | Sichuan Fulin vs. China State Construction | Sichuan Fulin vs. China Mobile Limited | Sichuan Fulin vs. Industrial and Commercial |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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