Correlation Between GM and Goldsun Building
Can any of the company-specific risk be diversified away by investing in both GM and Goldsun Building 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 Goldsun Building into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Goldsun Building Materials, you can compare the effects of market volatilities on GM and Goldsun Building 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 Goldsun Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Goldsun Building.
Diversification Opportunities for GM and Goldsun Building
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and Goldsun is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Goldsun Building Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldsun Building Mat 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 Goldsun Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldsun Building Mat has no effect on the direction of GM i.e., GM and Goldsun Building go up and down completely randomly.
Pair Corralation between GM and Goldsun Building
Allowing for the 90-day total investment horizon GM is expected to generate 1.56 times less return on investment than Goldsun Building. In addition to that, GM is 1.14 times more volatile than Goldsun Building Materials. It trades about 0.05 of its total potential returns per unit of risk. Goldsun Building Materials is currently generating about 0.09 per unit of volatility. If you would invest 2,530 in Goldsun Building Materials on August 26, 2024 and sell it today you would earn a total of 2,710 from holding Goldsun Building Materials or generate 107.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.78% |
| Values | Daily Returns |
General Motors vs. Goldsun Building Materials
Performance |
| Timeline |
| General Motors |
| Goldsun Building Mat |
GM and Goldsun Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Goldsun Building
The main advantage of trading using opposite GM and Goldsun Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Goldsun Building 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 Goldsun Building will offset losses from the drop in Goldsun Building's long position.The idea behind General Motors and Goldsun Building Materials 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.| Goldsun Building vs. Cathay Real Estate | Goldsun Building vs. Huaku Development Co | Goldsun Building vs. BES Engineering Co | Goldsun Building vs. Prince Housing Development |
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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