Correlation Between GM and Shanghai Pudong
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By analyzing existing cross correlation between General Motors and Shanghai Pudong Development, you can compare the effects of market volatilities on GM and Shanghai Pudong 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 Shanghai Pudong. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Shanghai Pudong.
Diversification Opportunities for GM and Shanghai Pudong
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Shanghai is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Shanghai Pudong Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Pudong Deve 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 Shanghai Pudong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Pudong Deve has no effect on the direction of GM i.e., GM and Shanghai Pudong go up and down completely randomly.
Pair Corralation between GM and Shanghai Pudong
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.82 times more return on investment than Shanghai Pudong. However, GM is 1.82 times more volatile than Shanghai Pudong Development. It trades about 0.05 of its potential returns per unit of risk. Shanghai Pudong Development is currently generating about 0.06 per unit of risk. If you would invest 3,749 in General Motors on August 29, 2024 and sell it today you would earn a total of 1,801 from holding General Motors or generate 48.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.17% |
| Values | Daily Returns |
General Motors vs. Shanghai Pudong Development
Performance |
| Timeline |
| General Motors |
| Shanghai Pudong Deve |
GM and Shanghai Pudong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Shanghai Pudong
The main advantage of trading using opposite GM and Shanghai Pudong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Shanghai Pudong 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 Shanghai Pudong will offset losses from the drop in Shanghai Pudong's long position.The idea behind General Motors and Shanghai Pudong Development 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.| Shanghai Pudong vs. Hang Xiao Steel | Shanghai Pudong vs. Gansu Jiu Steel | Shanghai Pudong vs. Tianjin Capital Environmental | Shanghai Pudong vs. Eit Environmental Development |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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