Correlation Between GM and Beijing Tongyizhong
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By analyzing existing cross correlation between General Motors and Beijing Tongyizhong New, you can compare the effects of market volatilities on GM and Beijing Tongyizhong 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 Beijing Tongyizhong. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Beijing Tongyizhong.
Diversification Opportunities for GM and Beijing Tongyizhong
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GM and Beijing is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Beijing Tongyizhong New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Tongyizhong New 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 Beijing Tongyizhong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Tongyizhong New has no effect on the direction of GM i.e., GM and Beijing Tongyizhong go up and down completely randomly.
Pair Corralation between GM and Beijing Tongyizhong
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.71 times more return on investment than Beijing Tongyizhong. However, General Motors is 1.41 times less risky than Beijing Tongyizhong. It trades about 0.09 of its potential returns per unit of risk. Beijing Tongyizhong New is currently generating about 0.01 per unit of risk. If you would invest 3,550 in General Motors on September 14, 2024 and sell it today you would earn a total of 1,710 from holding General Motors or generate 48.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.58% |
| Values | Daily Returns |
General Motors vs. Beijing Tongyizhong New
Performance |
| Timeline |
| General Motors |
| Beijing Tongyizhong New |
GM and Beijing Tongyizhong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Beijing Tongyizhong
The main advantage of trading using opposite GM and Beijing Tongyizhong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Beijing Tongyizhong 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 Beijing Tongyizhong will offset losses from the drop in Beijing Tongyizhong's long position.The idea behind General Motors and Beijing Tongyizhong New 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.| Beijing Tongyizhong vs. Anhui Deli Household | Beijing Tongyizhong vs. Hainan Haiqi Transportation | Beijing Tongyizhong vs. Chongqing Changan Automobile | Beijing Tongyizhong vs. Yindu Kitchen Equipment |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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