Correlation Between GM and Showbox Corp
Can any of the company-specific risk be diversified away by investing in both GM and Showbox Corp 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 Showbox Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Showbox Corp, you can compare the effects of market volatilities on GM and Showbox Corp 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 Showbox Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Showbox Corp.
Diversification Opportunities for GM and Showbox Corp
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and Showbox is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Showbox Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Showbox Corp 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 Showbox Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Showbox Corp has no effect on the direction of GM i.e., GM and Showbox Corp go up and down completely randomly.
Pair Corralation between GM and Showbox Corp
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Showbox Corp. In addition to that, GM is 1.4 times more volatile than Showbox Corp. It trades about -0.34 of its total potential returns per unit of risk. Showbox Corp is currently generating about 0.43 per unit of volatility. If you would invest 293,000 in Showbox Corp on November 27, 2024 and sell it today you would earn a total of 39,000 from holding Showbox Corp or generate 13.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
General Motors vs. Showbox Corp
Performance |
| Timeline |
| General Motors |
| Showbox Corp |
GM and Showbox Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Showbox Corp
The main advantage of trading using opposite GM and Showbox Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Showbox Corp 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 Showbox Corp will offset losses from the drop in Showbox Corp's long position.The idea behind General Motors and Showbox Corp 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.| Showbox Corp vs. Haitai Confectionery Foods | Showbox Corp vs. Handok Clean Tech | Showbox Corp vs. Samyang Foods Co | Showbox Corp vs. Sejong Telecom |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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