Correlation Between GM and African Agriculture
Can any of the company-specific risk be diversified away by investing in both GM and African Agriculture at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GM and African Agriculture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and African Agriculture Holdings, you can compare the effects of market volatilities on GM and African Agriculture 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 African Agriculture. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and African Agriculture.
Diversification Opportunities for GM and African Agriculture
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and African is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and African Agriculture Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Agriculture 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 African Agriculture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Agriculture has no effect on the direction of GM i.e., GM and African Agriculture go up and down completely randomly.
Pair Corralation between GM and African Agriculture
If you would invest (100.00) in African Agriculture Holdings on November 29, 2024 and sell it today you would earn a total of 100.00 from holding African Agriculture Holdings or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
General Motors vs. African Agriculture Holdings
Performance |
| Timeline |
| General Motors |
| African Agriculture |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
GM and African Agriculture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and African Agriculture
The main advantage of trading using opposite GM and African Agriculture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, African Agriculture 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 African Agriculture will offset losses from the drop in African Agriculture's long position.The idea behind General Motors and African Agriculture Holdings 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.| African Agriculture vs. Corporacion America Airports | African Agriculture vs. Ryanair Holdings PLC | African Agriculture vs. Westinghouse Air Brake | African Agriculture vs. Tencent Music Entertainment |
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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