Correlation Between GM and Sino Wealth
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By analyzing existing cross correlation between General Motors and Sino Wealth Electronic, you can compare the effects of market volatilities on GM and Sino Wealth 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 Sino Wealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Sino Wealth.
Diversification Opportunities for GM and Sino Wealth
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Sino is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Sino Wealth Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino Wealth Electronic 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 Sino Wealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino Wealth Electronic has no effect on the direction of GM i.e., GM and Sino Wealth go up and down completely randomly.
Pair Corralation between GM and Sino Wealth
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.8 times more return on investment than Sino Wealth. However, General Motors is 1.25 times less risky than Sino Wealth. It trades about 0.07 of its potential returns per unit of risk. Sino Wealth Electronic is currently generating about -0.07 per unit of risk. If you would invest 5,273 in General Motors on August 29, 2024 and sell it today you would earn a total of 206.00 from holding General Motors or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Sino Wealth Electronic
Performance |
| Timeline |
| General Motors |
| Sino Wealth Electronic |
GM and Sino Wealth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Sino Wealth
The main advantage of trading using opposite GM and Sino Wealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Sino Wealth 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 Sino Wealth will offset losses from the drop in Sino Wealth's long position.The idea behind General Motors and Sino Wealth Electronic 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.| Sino Wealth vs. Lutian Machinery Co | Sino Wealth vs. China Longyuan Power | Sino Wealth vs. Changshu Tongrun Auto | Sino Wealth vs. PetroChina Co Ltd |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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