Correlation Between GM and Lutian Machinery
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By analyzing existing cross correlation between General Motors and Lutian Machinery Co, you can compare the effects of market volatilities on GM and Lutian Machinery 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 Lutian Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Lutian Machinery.
Diversification Opportunities for GM and Lutian Machinery
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Lutian is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Lutian Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lutian Machinery 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 Lutian Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lutian Machinery has no effect on the direction of GM i.e., GM and Lutian Machinery go up and down completely randomly.
Pair Corralation between GM and Lutian Machinery
Allowing for the 90-day total investment horizon GM is expected to generate 1.7 times less return on investment than Lutian Machinery. In addition to that, GM is 1.03 times more volatile than Lutian Machinery Co. It trades about 0.07 of its total potential returns per unit of risk. Lutian Machinery Co is currently generating about 0.13 per unit of volatility. If you would invest 1,410 in Lutian Machinery Co on August 29, 2024 and sell it today you would earn a total of 105.00 from holding Lutian Machinery Co or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Lutian Machinery Co
Performance |
| Timeline |
| General Motors |
| Lutian Machinery |
GM and Lutian Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Lutian Machinery
The main advantage of trading using opposite GM and Lutian Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Lutian Machinery 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 Lutian Machinery will offset losses from the drop in Lutian Machinery's long position.The idea behind General Motors and Lutian Machinery Co 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.| Lutian Machinery vs. Biwin Storage Technology | Lutian Machinery vs. PetroChina Co Ltd | Lutian Machinery vs. Industrial and Commercial | Lutian Machinery vs. China Construction Bank |
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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