Correlation Between GM and ATON
Can any of the company-specific risk be diversified away by investing in both GM and ATON 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 ATON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and ATON Inc, you can compare the effects of market volatilities on GM and ATON 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 ATON. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and ATON.
Diversification Opportunities for GM and ATON
Very weak diversification
The 3 months correlation between GM and ATON is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and ATON Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATON Inc 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 ATON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATON Inc has no effect on the direction of GM i.e., GM and ATON go up and down completely randomly.
Pair Corralation between GM and ATON
Allowing for the 90-day total investment horizon GM is expected to generate 8.85 times less return on investment than ATON. But when comparing it to its historical volatility, General Motors is 2.69 times less risky than ATON. It trades about 0.07 of its potential returns per unit of risk. ATON Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 399,500 in ATON Inc on August 29, 2024 and sell it today you would earn a total of 172,500 from holding ATON Inc or generate 43.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. ATON Inc
Performance |
| Timeline |
| General Motors |
| ATON Inc |
GM and ATON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and ATON
The main advantage of trading using opposite GM and ATON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, ATON 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 ATON will offset losses from the drop in ATON's long position.The idea behind General Motors and ATON Inc 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.| ATON vs. Daelim Trading Co | ATON vs. LB Investment | ATON vs. Samick Musical Instruments | ATON vs. Dongwon Metal Co |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |