Correlation Between GM and Afi Properties
Can any of the company-specific risk be diversified away by investing in both GM and Afi Properties 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 Afi Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Afi Properties, you can compare the effects of market volatilities on GM and Afi Properties 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 Afi Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Afi Properties.
Diversification Opportunities for GM and Afi Properties
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Afi is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Afi Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afi Properties 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 Afi Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afi Properties has no effect on the direction of GM i.e., GM and Afi Properties go up and down completely randomly.
Pair Corralation between GM and Afi Properties
Allowing for the 90-day total investment horizon GM is expected to generate 2.63 times less return on investment than Afi Properties. But when comparing it to its historical volatility, General Motors is 1.11 times less risky than Afi Properties. It trades about 0.03 of its potential returns per unit of risk. Afi Properties is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 970,600 in Afi Properties on November 19, 2024 and sell it today you would earn a total of 815,400 from holding Afi Properties or generate 84.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 77.62% |
| Values | Daily Returns |
General Motors vs. Afi Properties
Performance |
| Timeline |
| General Motors |
| Afi Properties |
GM and Afi Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Afi Properties
The main advantage of trading using opposite GM and Afi Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Afi Properties 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 Afi Properties will offset losses from the drop in Afi Properties' long position.The idea behind General Motors and Afi Properties 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.| Afi Properties vs. Alony Hetz Properties | Afi Properties vs. Clal Insurance Enterprises | Afi Properties vs. Electra | Afi Properties vs. Harel Insurance Investments |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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