Correlation Between GM and Hitechpros
Can any of the company-specific risk be diversified away by investing in both GM and Hitechpros 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 Hitechpros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Hitechpros, you can compare the effects of market volatilities on GM and Hitechpros 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 Hitechpros. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Hitechpros.
Diversification Opportunities for GM and Hitechpros
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Hitechpros is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Hitechpros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitechpros 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 Hitechpros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitechpros has no effect on the direction of GM i.e., GM and Hitechpros go up and down completely randomly.
Pair Corralation between GM and Hitechpros
Allowing for the 90-day total investment horizon GM is expected to generate 1.73 times less return on investment than Hitechpros. But when comparing it to its historical volatility, General Motors is 2.76 times less risky than Hitechpros. It trades about 0.05 of its potential returns per unit of risk. Hitechpros is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,530 in Hitechpros on August 30, 2024 and sell it today you would earn a total of 50.00 from holding Hitechpros or generate 3.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.19% |
| Values | Daily Returns |
General Motors vs. Hitechpros
Performance |
| Timeline |
| General Motors |
| Hitechpros |
GM and Hitechpros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Hitechpros
The main advantage of trading using opposite GM and Hitechpros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Hitechpros 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 Hitechpros will offset losses from the drop in Hitechpros' long position.The idea behind General Motors and Hitechpros 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.| Hitechpros vs. Aubay Socit Anonyme | Hitechpros vs. Infotel SA | Hitechpros vs. IT Link | Hitechpros vs. Manitou BF SA |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |