Correlation Between GM and Wenzhou Hongfeng
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By analyzing existing cross correlation between General Motors and Wenzhou Hongfeng Electrical, you can compare the effects of market volatilities on GM and Wenzhou Hongfeng 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 Wenzhou Hongfeng. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Wenzhou Hongfeng.
Diversification Opportunities for GM and Wenzhou Hongfeng
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GM and Wenzhou is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Wenzhou Hongfeng Electrical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wenzhou Hongfeng Ele 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 Wenzhou Hongfeng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wenzhou Hongfeng Ele has no effect on the direction of GM i.e., GM and Wenzhou Hongfeng go up and down completely randomly.
Pair Corralation between GM and Wenzhou Hongfeng
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Wenzhou Hongfeng. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 1.17 times less risky than Wenzhou Hongfeng. The stock trades about -0.14 of its potential returns per unit of risk. The Wenzhou Hongfeng Electrical is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 683.00 in Wenzhou Hongfeng Electrical on September 12, 2024 and sell it today you would lose (9.00) from holding Wenzhou Hongfeng Electrical or give up 1.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
General Motors vs. Wenzhou Hongfeng Electrical
Performance |
| Timeline |
| General Motors |
| Wenzhou Hongfeng Ele |
GM and Wenzhou Hongfeng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Wenzhou Hongfeng
The main advantage of trading using opposite GM and Wenzhou Hongfeng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Wenzhou Hongfeng 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 Wenzhou Hongfeng will offset losses from the drop in Wenzhou Hongfeng's long position.The idea behind General Motors and Wenzhou Hongfeng Electrical 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.| Wenzhou Hongfeng vs. YLZ Information Tech | Wenzhou Hongfeng vs. Xiamen Goldenhome Co | Wenzhou Hongfeng vs. ButOne Information Corp | Wenzhou Hongfeng vs. Nanxing Furniture Machinery |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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