Correlation Between GM and China Shenhua
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By analyzing existing cross correlation between General Motors and China Shenhua Energy, you can compare the effects of market volatilities on GM and China Shenhua 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 China Shenhua. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and China Shenhua.
Diversification Opportunities for GM and China Shenhua
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and China is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and China Shenhua Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Shenhua Energy 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 China Shenhua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Shenhua Energy has no effect on the direction of GM i.e., GM and China Shenhua go up and down completely randomly.
Pair Corralation between GM and China Shenhua
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the China Shenhua. In addition to that, GM is 2.02 times more volatile than China Shenhua Energy. It trades about -0.34 of its total potential returns per unit of risk. China Shenhua Energy is currently generating about -0.64 per unit of volatility. If you would invest 4,000 in China Shenhua Energy on November 27, 2024 and sell it today you would lose (424.00) from holding China Shenhua Energy or give up 10.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 75.0% |
| Values | Daily Returns |
General Motors vs. China Shenhua Energy
Performance |
| Timeline |
| General Motors |
| China Shenhua Energy |
GM and China Shenhua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and China Shenhua
The main advantage of trading using opposite GM and China Shenhua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, China Shenhua 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 China Shenhua will offset losses from the drop in China Shenhua's long position.The idea behind General Motors and China Shenhua Energy 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.| China Shenhua vs. Haima Automobile Group | China Shenhua vs. CIMC Vehicles Co | China Shenhua vs. Changchun Engley Automobile | China Shenhua vs. Zhejiang Qianjiang Motorcycle |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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