Correlation Between GM and OLIPASS
Can any of the company-specific risk be diversified away by investing in both GM and OLIPASS 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 OLIPASS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and OLIPASS, you can compare the effects of market volatilities on GM and OLIPASS 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 OLIPASS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and OLIPASS.
Diversification Opportunities for GM and OLIPASS
Excellent diversification
The 3 months correlation between GM and OLIPASS is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and OLIPASS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OLIPASS 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 OLIPASS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OLIPASS has no effect on the direction of GM i.e., GM and OLIPASS go up and down completely randomly.
Pair Corralation between GM and OLIPASS
Allowing for the 90-day total investment horizon GM is expected to generate 4.49 times less return on investment than OLIPASS. But when comparing it to its historical volatility, General Motors is 2.16 times less risky than OLIPASS. It trades about 0.13 of its potential returns per unit of risk. OLIPASS is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 471,000 in OLIPASS on August 30, 2024 and sell it today you would earn a total of 168,000 from holding OLIPASS or generate 35.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
General Motors vs. OLIPASS
Performance |
| Timeline |
| General Motors |
| OLIPASS |
GM and OLIPASS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and OLIPASS
The main advantage of trading using opposite GM and OLIPASS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, OLIPASS 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 OLIPASS will offset losses from the drop in OLIPASS's long position.The idea behind General Motors and OLIPASS 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.| OLIPASS vs. Daejung Chemicals Metals | OLIPASS vs. Samyang Foods Co | OLIPASS vs. DONGKUK TED METAL | OLIPASS vs. Duksan Hi Metal |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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