Correlation Between GM and Alpha En
Can any of the company-specific risk be diversified away by investing in both GM and Alpha En 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 Alpha En into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and alpha En, you can compare the effects of market volatilities on GM and Alpha En 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 Alpha En. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Alpha En.
Diversification Opportunities for GM and Alpha En
Pay attention - limited upside
The 3 months correlation between GM and Alpha is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and alpha En in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on alpha En 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 Alpha En. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of alpha En has no effect on the direction of GM i.e., GM and Alpha En go up and down completely randomly.
Pair Corralation between GM and Alpha En
If you would invest 0.01 in alpha En on November 4, 2024 and sell it today you would earn a total of 0.00 from holding alpha En or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
General Motors vs. alpha En
Performance |
| Timeline |
| General Motors |
| alpha En |
GM and Alpha En Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Alpha En
The main advantage of trading using opposite GM and Alpha En positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Alpha En 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 Alpha En will offset losses from the drop in Alpha En's long position.The idea behind General Motors and alpha En 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.| Alpha En vs. Alps Electric Co | Alpha En vs. Bitmine Immersion Technologies | Alpha En vs. American Aires | Alpha En vs. AT S Austria |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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