Correlation Between GM and Anhui Fuhuang
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By analyzing existing cross correlation between General Motors and Anhui Fuhuang Steel, you can compare the effects of market volatilities on GM and Anhui Fuhuang 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 Anhui Fuhuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Anhui Fuhuang.
Diversification Opportunities for GM and Anhui Fuhuang
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GM and Anhui is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Anhui Fuhuang Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Fuhuang Steel 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 Anhui Fuhuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Fuhuang Steel has no effect on the direction of GM i.e., GM and Anhui Fuhuang go up and down completely randomly.
Pair Corralation between GM and Anhui Fuhuang
Allowing for the 90-day total investment horizon GM is expected to generate 4.11 times less return on investment than Anhui Fuhuang. But when comparing it to its historical volatility, General Motors is 1.55 times less risky than Anhui Fuhuang. It trades about 0.1 of its potential returns per unit of risk. Anhui Fuhuang Steel is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 364.00 in Anhui Fuhuang Steel on September 2, 2024 and sell it today you would earn a total of 275.00 from holding Anhui Fuhuang Steel or generate 75.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 92.19% |
| Values | Daily Returns |
General Motors vs. Anhui Fuhuang Steel
Performance |
| Timeline |
| General Motors |
| Anhui Fuhuang Steel |
GM and Anhui Fuhuang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Anhui Fuhuang
The main advantage of trading using opposite GM and Anhui Fuhuang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Anhui Fuhuang 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 Anhui Fuhuang will offset losses from the drop in Anhui Fuhuang's long position.The idea behind General Motors and Anhui Fuhuang Steel 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.| Anhui Fuhuang vs. Shandong Huifa Foodstuff | Anhui Fuhuang vs. Xiwang Foodstuffs Co | Anhui Fuhuang vs. Oriental Times Media | Anhui Fuhuang vs. Dalian Zeus Entertainment |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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