Correlation Between GM and Shaanxi Beiyuan
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By analyzing existing cross correlation between General Motors and Shaanxi Beiyuan Chemical, you can compare the effects of market volatilities on GM and Shaanxi Beiyuan 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 Shaanxi Beiyuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Shaanxi Beiyuan.
Diversification Opportunities for GM and Shaanxi Beiyuan
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Shaanxi is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Shaanxi Beiyuan Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaanxi Beiyuan Chemical 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 Shaanxi Beiyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaanxi Beiyuan Chemical has no effect on the direction of GM i.e., GM and Shaanxi Beiyuan go up and down completely randomly.
Pair Corralation between GM and Shaanxi Beiyuan
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.61 times more return on investment than Shaanxi Beiyuan. However, GM is 1.61 times more volatile than Shaanxi Beiyuan Chemical. It trades about 0.06 of its potential returns per unit of risk. Shaanxi Beiyuan Chemical is currently generating about -0.01 per unit of risk. If you would invest 3,283 in General Motors on September 12, 2024 and sell it today you would earn a total of 1,991 from holding General Motors or generate 60.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.16% |
| Values | Daily Returns |
General Motors vs. Shaanxi Beiyuan Chemical
Performance |
| Timeline |
| General Motors |
| Shaanxi Beiyuan Chemical |
GM and Shaanxi Beiyuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Shaanxi Beiyuan
The main advantage of trading using opposite GM and Shaanxi Beiyuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Shaanxi Beiyuan 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 Shaanxi Beiyuan will offset losses from the drop in Shaanxi Beiyuan's long position.The idea behind General Motors and Shaanxi Beiyuan Chemical 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.| Shaanxi Beiyuan vs. HUAQIN TECHNOLOGY LTD | Shaanxi Beiyuan vs. Jinhe Biotechnology Co | Shaanxi Beiyuan vs. Shaanxi Energy Investment | Shaanxi Beiyuan vs. Zhejiang Construction Investment |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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