Correlation Between GM and Shanxi Tond
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By analyzing existing cross correlation between General Motors and Shanxi Tond Chemical, you can compare the effects of market volatilities on GM and Shanxi Tond 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 Shanxi Tond. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Shanxi Tond.
Diversification Opportunities for GM and Shanxi Tond
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Shanxi is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Shanxi Tond Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanxi Tond Chemical 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 Shanxi Tond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanxi Tond Chemical has no effect on the direction of GM i.e., GM and Shanxi Tond go up and down completely randomly.
Pair Corralation between GM and Shanxi Tond
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.06 times more return on investment than Shanxi Tond. However, GM is 1.06 times more volatile than Shanxi Tond Chemical. It trades about 0.03 of its potential returns per unit of risk. Shanxi Tond Chemical is currently generating about 0.0 per unit of risk. If you would invest 4,852 in General Motors on October 14, 2024 and sell it today you would earn a total of 133.00 from holding General Motors or generate 2.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.38% |
| Values | Daily Returns |
General Motors vs. Shanxi Tond Chemical
Performance |
| Timeline |
| General Motors |
| Shanxi Tond Chemical |
GM and Shanxi Tond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Shanxi Tond
The main advantage of trading using opposite GM and Shanxi Tond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Shanxi Tond 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 Shanxi Tond will offset losses from the drop in Shanxi Tond's long position.The idea behind General Motors and Shanxi Tond Chemical 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.| Shanxi Tond vs. Tibet Huayu Mining | Shanxi Tond vs. Hefei Metalforming Mach | Shanxi Tond vs. Beijing HuaYuanYiTong Thermal | Shanxi Tond vs. Xinjiang Baodi Mining |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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