Correlation Between GM and Alpha Star
Can any of the company-specific risk be diversified away by investing in both GM and Alpha Star 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 Star 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 Star Acquisition, you can compare the effects of market volatilities on GM and Alpha Star 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 Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Alpha Star.
Diversification Opportunities for GM and Alpha Star
0.0 | Correlation Coefficient |
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 Star Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Star Acquisition 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 Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Star Acquisition has no effect on the direction of GM i.e., GM and Alpha Star go up and down completely randomly.
Pair Corralation between GM and Alpha Star
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.82 times more return on investment than Alpha Star. However, GM is 1.82 times more volatile than Alpha Star Acquisition. It trades about 0.05 of its potential returns per unit of risk. Alpha Star Acquisition is currently generating about 0.03 per unit of risk. If you would invest 3,731 in General Motors on August 27, 2024 and sell it today you would earn a total of 2,122 from holding General Motors or generate 56.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 91.53% |
| Values | Daily Returns |
General Motors vs. Alpha Star Acquisition
Performance |
| Timeline |
| General Motors |
| Alpha Star Acquisition |
GM and Alpha Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Alpha Star
The main advantage of trading using opposite GM and Alpha Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Alpha Star 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 Star will offset losses from the drop in Alpha Star's long position.The idea behind General Motors and Alpha Star Acquisition 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 Star vs. PowerUp Acquisition Corp | Alpha Star vs. Aurora Innovation | Alpha Star vs. HUMANA INC | Alpha Star vs. Aquagold International |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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