Correlation Between GM and Aarti Industries
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By analyzing existing cross correlation between General Motors and Aarti Industries Limited, you can compare the effects of market volatilities on GM and Aarti Industries 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 Aarti Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Aarti Industries.
Diversification Opportunities for GM and Aarti Industries
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Aarti is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Aarti Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aarti Industries 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 Aarti Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aarti Industries has no effect on the direction of GM i.e., GM and Aarti Industries go up and down completely randomly.
Pair Corralation between GM and Aarti Industries
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.79 times more return on investment than Aarti Industries. However, General Motors is 1.26 times less risky than Aarti Industries. It trades about 0.11 of its potential returns per unit of risk. Aarti Industries Limited is currently generating about -0.02 per unit of risk. If you would invest 3,280 in General Motors on August 29, 2024 and sell it today you would earn a total of 2,199 from holding General Motors or generate 67.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 97.58% |
| Values | Daily Returns |
General Motors vs. Aarti Industries Limited
Performance |
| Timeline |
| General Motors |
| Aarti Industries |
GM and Aarti Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Aarti Industries
The main advantage of trading using opposite GM and Aarti Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Aarti Industries 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 Aarti Industries will offset losses from the drop in Aarti Industries' long position.The idea behind General Motors and Aarti Industries Limited 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.| Aarti Industries vs. NMDC Limited | Aarti Industries vs. Steel Authority of | Aarti Industries vs. Embassy Office Parks | Aarti Industries vs. Gujarat Alkalies and |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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