Correlation Between GM and Sichuan Furong
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By analyzing existing cross correlation between General Motors and Sichuan Furong Technology, you can compare the effects of market volatilities on GM and Sichuan Furong 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 Sichuan Furong. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Sichuan Furong.
Diversification Opportunities for GM and Sichuan Furong
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Sichuan is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Sichuan Furong Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Furong Technology 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 Sichuan Furong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Furong Technology has no effect on the direction of GM i.e., GM and Sichuan Furong go up and down completely randomly.
Pair Corralation between GM and Sichuan Furong
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.61 times more return on investment than Sichuan Furong. However, General Motors is 1.63 times less risky than Sichuan Furong. It trades about -0.07 of its potential returns per unit of risk. Sichuan Furong Technology is currently generating about -0.13 per unit of risk. If you would invest 5,467 in General Motors on September 27, 2024 and sell it today you would lose (116.00) from holding General Motors or give up 2.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
General Motors vs. Sichuan Furong Technology
Performance |
| Timeline |
| General Motors |
| Sichuan Furong Technology |
GM and Sichuan Furong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Sichuan Furong
The main advantage of trading using opposite GM and Sichuan Furong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Sichuan Furong 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 Sichuan Furong will offset losses from the drop in Sichuan Furong's long position.The idea behind General Motors and Sichuan Furong Technology 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.| Sichuan Furong vs. Bank of China | Sichuan Furong vs. Kweichow Moutai Co | Sichuan Furong vs. PetroChina Co Ltd | Sichuan Furong vs. Bank of Communications |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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