Correlation Between GM and Asia Carbon
Can any of the company-specific risk be diversified away by investing in both GM and Asia Carbon 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 Asia Carbon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Asia Carbon Industries, you can compare the effects of market volatilities on GM and Asia Carbon 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 Asia Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Asia Carbon.
Diversification Opportunities for GM and Asia Carbon
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Asia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Asia Carbon Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Carbon 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 Asia Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Carbon Industries has no effect on the direction of GM i.e., GM and Asia Carbon go up and down completely randomly.
Pair Corralation between GM and Asia Carbon
If you would invest 5,292 in General Motors on August 24, 2024 and sell it today you would earn a total of 561.00 from holding General Motors or generate 10.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
General Motors vs. Asia Carbon Industries
Performance |
| Timeline |
| General Motors |
| Asia Carbon Industries |
GM and Asia Carbon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Asia Carbon
The main advantage of trading using opposite GM and Asia Carbon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Asia Carbon 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 Asia Carbon will offset losses from the drop in Asia Carbon's long position.The idea behind General Motors and Asia Carbon Industries 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.| Asia Carbon vs. First Graphene | Asia Carbon vs. HUMANA INC | Asia Carbon vs. Aquagold International | Asia Carbon vs. Barloworld Ltd ADR |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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