Correlation Between GM and PLANT VEDA
Can any of the company-specific risk be diversified away by investing in both GM and PLANT VEDA 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 PLANT VEDA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and PLANT VEDA FOODS, you can compare the effects of market volatilities on GM and PLANT VEDA 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 PLANT VEDA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and PLANT VEDA.
Diversification Opportunities for GM and PLANT VEDA
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and PLANT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and PLANT VEDA FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLANT VEDA FOODS 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 PLANT VEDA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLANT VEDA FOODS has no effect on the direction of GM i.e., GM and PLANT VEDA go up and down completely randomly.
Pair Corralation between GM and PLANT VEDA
Allowing for the 90-day total investment horizon GM is expected to generate 60.2 times less return on investment than PLANT VEDA. But when comparing it to its historical volatility, General Motors is 21.19 times less risky than PLANT VEDA. It trades about 0.04 of its potential returns per unit of risk. PLANT VEDA FOODS is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5.00 in PLANT VEDA FOODS on December 5, 2024 and sell it today you would lose (3.85) from holding PLANT VEDA FOODS or give up 77.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.0% |
| Values | Daily Returns |
General Motors vs. PLANT VEDA FOODS
Performance |
| Timeline |
| General Motors |
| PLANT VEDA FOODS |
GM and PLANT VEDA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and PLANT VEDA
The main advantage of trading using opposite GM and PLANT VEDA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, PLANT VEDA 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 PLANT VEDA will offset losses from the drop in PLANT VEDA's long position.The idea behind General Motors and PLANT VEDA FOODS 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.| PLANT VEDA vs. Western Copper and | PLANT VEDA vs. Chengdu PUTIAN Telecommunications | PLANT VEDA vs. CORNISH METALS INC | PLANT VEDA vs. Zijin Mining Group |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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