Correlation Between GM and Visual Photonics
Can any of the company-specific risk be diversified away by investing in both GM and Visual Photonics 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 Visual Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Visual Photonics Epitaxy, you can compare the effects of market volatilities on GM and Visual Photonics 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 Visual Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Visual Photonics.
Diversification Opportunities for GM and Visual Photonics
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Visual is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Visual Photonics Epitaxy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visual Photonics Epitaxy 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 Visual Photonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visual Photonics Epitaxy has no effect on the direction of GM i.e., GM and Visual Photonics go up and down completely randomly.
Pair Corralation between GM and Visual Photonics
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Visual Photonics. In addition to that, GM is 1.23 times more volatile than Visual Photonics Epitaxy. It trades about -0.22 of its total potential returns per unit of risk. Visual Photonics Epitaxy is currently generating about -0.11 per unit of volatility. If you would invest 15,450 in Visual Photonics Epitaxy on November 28, 2024 and sell it today you would lose (650.00) from holding Visual Photonics Epitaxy or give up 4.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 81.82% |
| Values | Daily Returns |
General Motors vs. Visual Photonics Epitaxy
Performance |
| Timeline |
| General Motors |
| Visual Photonics Epitaxy |
GM and Visual Photonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Visual Photonics
The main advantage of trading using opposite GM and Visual Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Visual Photonics 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 Visual Photonics will offset losses from the drop in Visual Photonics' long position.The idea behind General Motors and Visual Photonics Epitaxy 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.| Visual Photonics vs. WIN Semiconductors | Visual Photonics vs. Advanced Wireless Semiconductor | Visual Photonics vs. Elan Microelectronics Corp | Visual Photonics vs. King Yuan Electronics |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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