Correlation Between GM and ACG Metals
Can any of the company-specific risk be diversified away by investing in both GM and ACG Metals 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 ACG Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and ACG Metals Limited, you can compare the effects of market volatilities on GM and ACG Metals 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 ACG Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and ACG Metals.
Diversification Opportunities for GM and ACG Metals
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and ACG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and ACG Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACG Metals Limited 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 ACG Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACG Metals Limited has no effect on the direction of GM i.e., GM and ACG Metals go up and down completely randomly.
Pair Corralation between GM and ACG Metals
If you would invest 3,889 in General Motors on August 28, 2024 and sell it today you would earn a total of 2,131 from holding General Motors or generate 54.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 57.34% |
| Values | Daily Returns |
General Motors vs. ACG Metals Limited
Performance |
| Timeline |
| General Motors |
| ACG Metals Limited |
GM and ACG Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and ACG Metals
The main advantage of trading using opposite GM and ACG Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, ACG Metals 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 ACG Metals will offset losses from the drop in ACG Metals' long position.The idea behind General Motors and ACG Metals 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.| ACG Metals vs. Legacy Education | ACG Metals vs. NVIDIA | ACG Metals vs. Apple Inc | ACG Metals vs. Microsoft |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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