Correlation Between GM and Asia Electronic
Can any of the company-specific risk be diversified away by investing in both GM and Asia Electronic 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 Asia Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Asia Electronic Material, you can compare the effects of market volatilities on GM and Asia Electronic 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 Asia Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Asia Electronic.
Diversification Opportunities for GM and Asia Electronic
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Asia is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Asia Electronic Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Electronic Material 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 Asia Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Electronic Material has no effect on the direction of GM i.e., GM and Asia Electronic go up and down completely randomly.
Pair Corralation between GM and Asia Electronic
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.93 times more return on investment than Asia Electronic. However, GM is 2.93 times more volatile than Asia Electronic Material. It trades about 0.17 of its potential returns per unit of risk. Asia Electronic Material is currently generating about -0.13 per unit of risk. If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Asia Electronic Material
Performance |
| Timeline |
| General Motors |
| Asia Electronic Material |
GM and Asia Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Asia Electronic
The main advantage of trading using opposite GM and Asia Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Asia Electronic 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 Asia Electronic will offset losses from the drop in Asia Electronic's long position.The idea behind General Motors and Asia Electronic Material 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.| Asia Electronic vs. GameSparcs Co | Asia Electronic vs. Microelectronics Technology | Asia Electronic vs. GAME HOURS | Asia Electronic vs. TWOWAY Communications |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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