Correlation Between GM and Advanced Info
Can any of the company-specific risk be diversified away by investing in both GM and Advanced Info 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 Advanced Info into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Advanced Info Service, you can compare the effects of market volatilities on GM and Advanced Info 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 Advanced Info. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Advanced Info.
Diversification Opportunities for GM and Advanced Info
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and Advanced is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Advanced Info Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Info Service 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 Advanced Info. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Info Service has no effect on the direction of GM i.e., GM and Advanced Info go up and down completely randomly.
Pair Corralation between GM and Advanced Info
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Advanced Info. In addition to that, GM is 2.1 times more volatile than Advanced Info Service. It trades about -0.05 of its total potential returns per unit of risk. Advanced Info Service is currently generating about 0.0 per unit of volatility. If you would invest 28,500 in Advanced Info Service on November 3, 2024 and sell it today you would lose (100.00) from holding Advanced Info Service or give up 0.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
General Motors vs. Advanced Info Service
Performance |
| Timeline |
| General Motors |
| Advanced Info Service |
GM and Advanced Info Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Advanced Info
The main advantage of trading using opposite GM and Advanced Info positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Advanced Info 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 Advanced Info will offset losses from the drop in Advanced Info's long position.The idea behind General Motors and Advanced Info Service 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.| Advanced Info vs. PTT Public | Advanced Info vs. CP ALL Public | Advanced Info vs. Kasikornbank Public | Advanced Info vs. Bangkok Bank Public |
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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