Correlation Between GM and TOPBI International
Can any of the company-specific risk be diversified away by investing in both GM and TOPBI International 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 TOPBI International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and TOPBI International Holdings, you can compare the effects of market volatilities on GM and TOPBI International 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 TOPBI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and TOPBI International.
Diversification Opportunities for GM and TOPBI International
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and TOPBI is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and TOPBI International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOPBI International 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 TOPBI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOPBI International has no effect on the direction of GM i.e., GM and TOPBI International go up and down completely randomly.
Pair Corralation between GM and TOPBI International
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.76 times more return on investment than TOPBI International. However, General Motors is 1.32 times less risky than TOPBI International. It trades about 0.11 of its potential returns per unit of risk. TOPBI International Holdings is currently generating about 0.04 per unit of risk. If you would invest 3,324 in General Motors on September 2, 2024 and sell it today you would earn a total of 2,235 from holding General Motors or generate 67.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.98% |
| Values | Daily Returns |
General Motors vs. TOPBI International Holdings
Performance |
| Timeline |
| General Motors |
| TOPBI International |
GM and TOPBI International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and TOPBI International
The main advantage of trading using opposite GM and TOPBI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, TOPBI International 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 TOPBI International will offset losses from the drop in TOPBI International's long position.The idea behind General Motors and TOPBI International Holdings 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.| TOPBI International vs. Makalot Industrial Co | TOPBI International vs. Shinkong Textile Co | TOPBI International vs. Tah Hsin Industrial | TOPBI International vs. Tainan Enterprises 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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