Correlation Between GM and Auking Mining
Can any of the company-specific risk be diversified away by investing in both GM and Auking 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 Auking 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 Auking Mining, you can compare the effects of market volatilities on GM and Auking 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 Auking Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Auking Mining.
Diversification Opportunities for GM and Auking Mining
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GM and Auking is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Auking Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auking 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 Auking Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auking Mining has no effect on the direction of GM i.e., GM and Auking Mining go up and down completely randomly.
Pair Corralation between GM and Auking Mining
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.32 times more return on investment than Auking Mining. However, General Motors is 3.16 times less risky than Auking Mining. It trades about -0.05 of its potential returns per unit of risk. Auking Mining is currently generating about -0.16 per unit of risk. If you would invest 5,137 in General Motors on November 3, 2024 and sell it today you would lose (191.00) from holding General Motors or give up 3.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
General Motors vs. Auking Mining
Performance |
| Timeline |
| General Motors |
| Auking Mining |
GM and Auking Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Auking Mining
The main advantage of trading using opposite GM and Auking Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Auking 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 Auking Mining will offset losses from the drop in Auking Mining's long position.The idea behind General Motors and Auking 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.| Auking Mining vs. Super Retail Group | Auking Mining vs. Dexus Convenience Retail | Auking Mining vs. Charter Hall Retail | Auking Mining vs. Advanced Braking Technology |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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