Correlation Between GM and Awea Mechantronic
Can any of the company-specific risk be diversified away by investing in both GM and Awea Mechantronic 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 Awea Mechantronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Awea Mechantronic Co, you can compare the effects of market volatilities on GM and Awea Mechantronic 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 Awea Mechantronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Awea Mechantronic.
Diversification Opportunities for GM and Awea Mechantronic
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Awea is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Awea Mechantronic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awea Mechantronic 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 Awea Mechantronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awea Mechantronic has no effect on the direction of GM i.e., GM and Awea Mechantronic go up and down completely randomly.
Pair Corralation between GM and Awea Mechantronic
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.31 times more return on investment than Awea Mechantronic. However, GM is 2.31 times more volatile than Awea Mechantronic Co. It trades about 0.12 of its potential returns per unit of risk. Awea Mechantronic Co is currently generating about -0.27 per unit of risk. If you would invest 5,180 in General Motors on September 4, 2024 and sell it today you would earn a total of 324.00 from holding General Motors or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Awea Mechantronic Co
Performance |
| Timeline |
| General Motors |
| Awea Mechantronic |
GM and Awea Mechantronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Awea Mechantronic
The main advantage of trading using opposite GM and Awea Mechantronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Awea Mechantronic 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 Awea Mechantronic will offset losses from the drop in Awea Mechantronic's long position.The idea behind General Motors and Awea Mechantronic Co 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.| Awea Mechantronic vs. Universal Microelectronics Co | Awea Mechantronic vs. AVerMedia Technologies | Awea Mechantronic vs. Symtek Automation Asia | Awea Mechantronic vs. WiseChip Semiconductor |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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