Correlation Between GM and Beijing Lier
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By analyzing existing cross correlation between General Motors and Beijing Lier High, you can compare the effects of market volatilities on GM and Beijing Lier 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 Lier. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Beijing Lier.
Diversification Opportunities for GM and Beijing Lier
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Beijing is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Beijing Lier High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Lier High 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 Lier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Lier High has no effect on the direction of GM i.e., GM and Beijing Lier go up and down completely randomly.
Pair Corralation between GM and Beijing Lier
Allowing for the 90-day total investment horizon GM is expected to generate 1.62 times less return on investment than Beijing Lier. But when comparing it to its historical volatility, General Motors is 1.21 times less risky than Beijing Lier. It trades about 0.08 of its potential returns per unit of risk. Beijing Lier High is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 336.00 in Beijing Lier High on September 3, 2024 and sell it today you would earn a total of 129.00 from holding Beijing Lier High or generate 38.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.8% |
| Values | Daily Returns |
General Motors vs. Beijing Lier High
Performance |
| Timeline |
| General Motors |
| Beijing Lier High |
GM and Beijing Lier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Beijing Lier
The main advantage of trading using opposite GM and Beijing Lier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Beijing Lier 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 Lier will offset losses from the drop in Beijing Lier's long position.The idea behind General Motors and Beijing Lier High 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 Lier vs. Maoming Petro Chemical Shihua | Beijing Lier vs. Yili Chuanning Biotechnology | Beijing Lier vs. Dymatic Chemicals | Beijing Lier vs. Hubei Dinglong Chemical |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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