Correlation Between GM and Cathay Nasdaq
Can any of the company-specific risk be diversified away by investing in both GM and Cathay Nasdaq at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GM and Cathay Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Cathay Nasdaq AI, you can compare the effects of market volatilities on GM and Cathay Nasdaq 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 Cathay Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Cathay Nasdaq.
Diversification Opportunities for GM and Cathay Nasdaq
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GM and Cathay is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Cathay Nasdaq AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Nasdaq AI 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 Cathay Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Nasdaq AI has no effect on the direction of GM i.e., GM and Cathay Nasdaq go up and down completely randomly.
Pair Corralation between GM and Cathay Nasdaq
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.86 times more return on investment than Cathay Nasdaq. However, GM is 1.86 times more volatile than Cathay Nasdaq AI. It trades about 0.11 of its potential returns per unit of risk. Cathay Nasdaq AI is currently generating about 0.06 per unit of risk. If you would invest 3,324 in General Motors on September 2, 2024 and sell it today you would earn a total of 2,235 from holding General Motors or generate 67.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.98% |
| Values | Daily Returns |
General Motors vs. Cathay Nasdaq AI
Performance |
| Timeline |
| General Motors |
| Cathay Nasdaq AI |
GM and Cathay Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Cathay Nasdaq
The main advantage of trading using opposite GM and Cathay Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Cathay Nasdaq 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 Cathay Nasdaq will offset losses from the drop in Cathay Nasdaq's long position.The idea behind General Motors and Cathay Nasdaq AI 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.| Cathay Nasdaq vs. Yuanta Daily CSI | Cathay Nasdaq vs. Fubon FTSE Vietnam | Cathay Nasdaq vs. Paradigm SP GSCI |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |