Correlation Between GM and Shenzhen Longsys
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By analyzing existing cross correlation between General Motors and Shenzhen Longsys Electronics, you can compare the effects of market volatilities on GM and Shenzhen Longsys 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 Shenzhen Longsys. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Shenzhen Longsys.
Diversification Opportunities for GM and Shenzhen Longsys
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Shenzhen is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Shenzhen Longsys Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Longsys 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 Shenzhen Longsys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Longsys Ele has no effect on the direction of GM i.e., GM and Shenzhen Longsys go up and down completely randomly.
Pair Corralation between GM and Shenzhen Longsys
Allowing for the 90-day total investment horizon GM is expected to generate 2.41 times less return on investment than Shenzhen Longsys. But when comparing it to its historical volatility, General Motors is 2.01 times less risky than Shenzhen Longsys. It trades about 0.08 of its potential returns per unit of risk. Shenzhen Longsys Electronics is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7,053 in Shenzhen Longsys Electronics on August 29, 2024 and sell it today you would earn a total of 1,573 from holding Shenzhen Longsys Electronics or generate 22.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.63% |
| Values | Daily Returns |
General Motors vs. Shenzhen Longsys Electronics
Performance |
| Timeline |
| General Motors |
| Shenzhen Longsys Ele |
GM and Shenzhen Longsys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Shenzhen Longsys
The main advantage of trading using opposite GM and Shenzhen Longsys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Shenzhen Longsys 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 Shenzhen Longsys will offset losses from the drop in Shenzhen Longsys' long position.The idea behind General Motors and Shenzhen Longsys Electronics 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.| Shenzhen Longsys vs. Beijing Wandong Medical | Shenzhen Longsys vs. Cowealth Medical China | Shenzhen Longsys vs. Winner Medical Co | Shenzhen Longsys vs. Jiangsu Jinling Sports |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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