Correlation Between GM and Xinke Material
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By analyzing existing cross correlation between General Motors and Xinke Material, you can compare the effects of market volatilities on GM and Xinke Material 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 Xinke Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Xinke Material.
Diversification Opportunities for GM and Xinke Material
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GM and Xinke is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Xinke Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinke 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 Xinke Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinke Material has no effect on the direction of GM i.e., GM and Xinke Material go up and down completely randomly.
Pair Corralation between GM and Xinke Material
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.22 times more return on investment than Xinke Material. However, GM is 1.22 times more volatile than Xinke Material. It trades about 0.17 of its potential returns per unit of risk. Xinke Material is currently generating about 0.06 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 Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Xinke Material
Performance |
| Timeline |
| General Motors |
| Xinke Material |
GM and Xinke Material Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Xinke Material
The main advantage of trading using opposite GM and Xinke Material positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Xinke Material 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 Xinke Material will offset losses from the drop in Xinke Material's long position.The idea behind General Motors and Xinke 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.| Xinke Material vs. Gome Telecom Equipment | Xinke Material vs. Eastern Communications Co | Xinke Material vs. Tongyu Communication | Xinke Material vs. Everdisplay Optronics Shanghai |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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