Correlation Between GM and Nantong Jiangshan
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By analyzing existing cross correlation between General Motors and Nantong Jiangshan Agrochemical, you can compare the effects of market volatilities on GM and Nantong Jiangshan 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 Nantong Jiangshan. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Nantong Jiangshan.
Diversification Opportunities for GM and Nantong Jiangshan
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Nantong is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Nantong Jiangshan Agrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nantong Jiangshan 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 Nantong Jiangshan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nantong Jiangshan has no effect on the direction of GM i.e., GM and Nantong Jiangshan go up and down completely randomly.
Pair Corralation between GM and Nantong Jiangshan
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.89 times more return on investment than Nantong Jiangshan. However, General Motors is 1.12 times less risky than Nantong Jiangshan. It trades about 0.13 of its potential returns per unit of risk. Nantong Jiangshan Agrochemical is currently generating about -0.01 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 Together |
| Strength | Significant |
| Accuracy | 96.03% |
| Values | Daily Returns |
General Motors vs. Nantong Jiangshan Agrochemical
Performance |
| Timeline |
| General Motors |
| Nantong Jiangshan |
GM and Nantong Jiangshan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Nantong Jiangshan
The main advantage of trading using opposite GM and Nantong Jiangshan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Nantong Jiangshan 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 Nantong Jiangshan will offset losses from the drop in Nantong Jiangshan's long position.The idea behind General Motors and Nantong Jiangshan Agrochemical 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.| Nantong Jiangshan vs. Zijin Mining Group | Nantong Jiangshan vs. Wanhua Chemical Group | Nantong Jiangshan vs. Baoshan Iron Steel | Nantong Jiangshan 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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