Correlation Between GM and Bentre Aquaproduct
Can any of the company-specific risk be diversified away by investing in both GM and Bentre Aquaproduct 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 Bentre Aquaproduct into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Bentre Aquaproduct Import, you can compare the effects of market volatilities on GM and Bentre Aquaproduct 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 Bentre Aquaproduct. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Bentre Aquaproduct.
Diversification Opportunities for GM and Bentre Aquaproduct
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Bentre is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Bentre Aquaproduct Import in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bentre Aquaproduct Import 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 Bentre Aquaproduct. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bentre Aquaproduct Import has no effect on the direction of GM i.e., GM and Bentre Aquaproduct go up and down completely randomly.
Pair Corralation between GM and Bentre Aquaproduct
Allowing for the 90-day total investment horizon GM is expected to generate 2.0 times less return on investment than Bentre Aquaproduct. But when comparing it to its historical volatility, General Motors is 1.16 times less risky than Bentre Aquaproduct. It trades about 0.02 of its potential returns per unit of risk. Bentre Aquaproduct Import is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,234,489 in Bentre Aquaproduct Import on November 8, 2024 and sell it today you would earn a total of 855,511 from holding Bentre Aquaproduct Import or generate 26.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 74.24% |
| Values | Daily Returns |
General Motors vs. Bentre Aquaproduct Import
Performance |
| Timeline |
| General Motors |
| Bentre Aquaproduct Import |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
GM and Bentre Aquaproduct Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Bentre Aquaproduct
The main advantage of trading using opposite GM and Bentre Aquaproduct positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Bentre Aquaproduct 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 Bentre Aquaproduct will offset losses from the drop in Bentre Aquaproduct's long position.The idea behind General Motors and Bentre Aquaproduct Import 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.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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