Correlation Between GM and Hubei Xingfa
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By analyzing existing cross correlation between General Motors and Hubei Xingfa Chemicals, you can compare the effects of market volatilities on GM and Hubei Xingfa 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 Hubei Xingfa. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Hubei Xingfa.
Diversification Opportunities for GM and Hubei Xingfa
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Hubei is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Hubei Xingfa Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubei Xingfa Chemicals 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 Hubei Xingfa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubei Xingfa Chemicals has no effect on the direction of GM i.e., GM and Hubei Xingfa go up and down completely randomly.
Pair Corralation between GM and Hubei Xingfa
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.03 times more return on investment than Hubei Xingfa. However, GM is 1.03 times more volatile than Hubei Xingfa Chemicals. It trades about 0.07 of its potential returns per unit of risk. Hubei Xingfa Chemicals is currently generating about 0.0 per unit of risk. If you would invest 5,273 in General Motors on August 28, 2024 and sell it today you would earn a total of 206.00 from holding General Motors or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Hubei Xingfa Chemicals
Performance |
| Timeline |
| General Motors |
| Hubei Xingfa Chemicals |
GM and Hubei Xingfa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Hubei Xingfa
The main advantage of trading using opposite GM and Hubei Xingfa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Hubei Xingfa 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 Hubei Xingfa will offset losses from the drop in Hubei Xingfa's long position.The idea behind General Motors and Hubei Xingfa Chemicals 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.| Hubei Xingfa vs. Zijin Mining Group | Hubei Xingfa vs. Wanhua Chemical Group | Hubei Xingfa vs. Baoshan Iron Steel | Hubei Xingfa vs. Shandong Gold Mining |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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