Correlation Between GM and Chailease Holding
Can any of the company-specific risk be diversified away by investing in both GM and Chailease Holding 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 Chailease Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Chailease Holding Co, you can compare the effects of market volatilities on GM and Chailease Holding 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 Chailease Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Chailease Holding.
Diversification Opportunities for GM and Chailease Holding
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Chailease is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Chailease Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chailease Holding 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 Chailease Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chailease Holding has no effect on the direction of GM i.e., GM and Chailease Holding go up and down completely randomly.
Pair Corralation between GM and Chailease Holding
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.02 times more return on investment than Chailease Holding. However, GM is 1.02 times more volatile than Chailease Holding Co. It trades about 0.13 of its potential returns per unit of risk. Chailease Holding Co is currently generating about -0.07 per unit of risk. If you would invest 4,319 in General Motors on August 28, 2024 and sell it today you would earn a total of 1,701 from holding General Motors or generate 39.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
General Motors vs. Chailease Holding Co
Performance |
| Timeline |
| General Motors |
| Chailease Holding |
GM and Chailease Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Chailease Holding
The main advantage of trading using opposite GM and Chailease Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Chailease Holding 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 Chailease Holding will offset losses from the drop in Chailease Holding's long position.The idea behind General Motors and Chailease Holding Co 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.| Chailease Holding vs. Fubon Financial Holding | Chailease Holding vs. CTBC Financial Holding | Chailease Holding vs. Mega Financial Holding | Chailease Holding vs. Cathay Financial Holding |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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