Correlation Between GM and Australian Agri
Can any of the company-specific risk be diversified away by investing in both GM and Australian Agri 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 Australian Agri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Australian Agri Projects, you can compare the effects of market volatilities on GM and Australian Agri 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 Australian Agri. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Australian Agri.
Diversification Opportunities for GM and Australian Agri
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Australian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Australian Agri Projects in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agri Projects 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 Australian Agri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agri Projects has no effect on the direction of GM i.e., GM and Australian Agri go up and down completely randomly.
Pair Corralation between GM and Australian Agri
If you would invest 3,765 in General Motors on September 4, 2024 and sell it today you would earn a total of 1,739 from holding General Motors or generate 46.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
General Motors vs. Australian Agri Projects
Performance |
| Timeline |
| General Motors |
| Australian Agri Projects |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Australian Agri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Australian Agri
The main advantage of trading using opposite GM and Australian Agri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Australian Agri 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 Australian Agri will offset losses from the drop in Australian Agri's long position.The idea behind General Motors and Australian Agri Projects 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.| Australian Agri vs. Evolution Mining | Australian Agri vs. Queste Communications | Australian Agri vs. Talisman Mining | Australian Agri vs. Champion Iron |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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