Correlation Between GM and Aspire Mining
Can any of the company-specific risk be diversified away by investing in both GM and Aspire Mining 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 Aspire Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Aspire Mining, you can compare the effects of market volatilities on GM and Aspire Mining 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 Aspire Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Aspire Mining.
Diversification Opportunities for GM and Aspire Mining
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Aspire is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Aspire Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspire Mining 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 Aspire Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspire Mining has no effect on the direction of GM i.e., GM and Aspire Mining go up and down completely randomly.
Pair Corralation between GM and Aspire Mining
Allowing for the 90-day total investment horizon GM is expected to generate 2.05 times less return on investment than Aspire Mining. But when comparing it to its historical volatility, General Motors is 2.54 times less risky than Aspire Mining. It trades about 0.08 of its potential returns per unit of risk. Aspire Mining is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 22.00 in Aspire Mining on August 31, 2024 and sell it today you would earn a total of 7.00 from holding Aspire Mining or generate 31.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.45% |
| Values | Daily Returns |
General Motors vs. Aspire Mining
Performance |
| Timeline |
| General Motors |
| Aspire Mining |
GM and Aspire Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Aspire Mining
The main advantage of trading using opposite GM and Aspire Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Aspire Mining 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 Aspire Mining will offset losses from the drop in Aspire Mining's long position.The idea behind General Motors and Aspire Mining 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.| Aspire Mining vs. Galileo Mining | Aspire Mining vs. Talisman Mining | Aspire Mining vs. Magnum Mining and | Aspire Mining vs. Truscott Mining Corp |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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