Correlation Between GM and Ador Welding
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By analyzing existing cross correlation between General Motors and Ador Welding Limited, you can compare the effects of market volatilities on GM and Ador Welding 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 Ador Welding. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Ador Welding.
Diversification Opportunities for GM and Ador Welding
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Ador is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Ador Welding Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ador Welding 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 Ador Welding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ador Welding Limited has no effect on the direction of GM i.e., GM and Ador Welding go up and down completely randomly.
Pair Corralation between GM and Ador Welding
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.88 times more return on investment than Ador Welding. However, General Motors is 1.14 times less risky than Ador Welding. It trades about 0.05 of its potential returns per unit of risk. Ador Welding Limited is currently generating about 0.04 per unit of risk. If you would invest 3,731 in General Motors on August 27, 2024 and sell it today you would earn a total of 2,122 from holding General Motors or generate 56.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.98% |
| Values | Daily Returns |
General Motors vs. Ador Welding Limited
Performance |
| Timeline |
| General Motors |
| Ador Welding Limited |
GM and Ador Welding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Ador Welding
The main advantage of trading using opposite GM and Ador Welding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Ador Welding 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 Ador Welding will offset losses from the drop in Ador Welding's long position.The idea behind General Motors and Ador Welding 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.| Ador Welding vs. Sapphire Foods India | Ador Welding vs. Megastar Foods Limited | Ador Welding vs. FCS Software Solutions | Ador Welding vs. UFO Moviez India |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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