Correlation Between GM and Amneal Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both GM and Amneal Pharmaceuticals 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 Amneal Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Amneal Pharmaceuticals, you can compare the effects of market volatilities on GM and Amneal Pharmaceuticals 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 Amneal Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Amneal Pharmaceuticals.
Diversification Opportunities for GM and Amneal Pharmaceuticals
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and Amneal is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Amneal Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amneal Pharmaceuticals 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 Amneal Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amneal Pharmaceuticals has no effect on the direction of GM i.e., GM and Amneal Pharmaceuticals go up and down completely randomly.
Pair Corralation between GM and Amneal Pharmaceuticals
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Amneal Pharmaceuticals. In addition to that, GM is 1.02 times more volatile than Amneal Pharmaceuticals. It trades about -0.21 of its total potential returns per unit of risk. Amneal Pharmaceuticals is currently generating about -0.07 per unit of volatility. If you would invest 760.00 in Amneal Pharmaceuticals on September 25, 2024 and sell it today you would lose (30.00) from holding Amneal Pharmaceuticals or give up 3.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Amneal Pharmaceuticals
Performance |
| Timeline |
| General Motors |
| Amneal Pharmaceuticals |
GM and Amneal Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Amneal Pharmaceuticals
The main advantage of trading using opposite GM and Amneal Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Amneal Pharmaceuticals 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 Amneal Pharmaceuticals will offset losses from the drop in Amneal Pharmaceuticals' long position.The idea behind General Motors and Amneal Pharmaceuticals 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.| Amneal Pharmaceuticals vs. Microchip Technology Incorporated | Amneal Pharmaceuticals vs. Computer And Technologies | Amneal Pharmaceuticals vs. SOUTHWEST AIRLINES | Amneal Pharmaceuticals vs. AEGEAN AIRLINES |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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