Correlation Between GM and Alx Oncology
Can any of the company-specific risk be diversified away by investing in both GM and Alx Oncology 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 Alx Oncology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Alx Oncology Holdings, you can compare the effects of market volatilities on GM and Alx Oncology 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 Alx Oncology. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Alx Oncology.
Diversification Opportunities for GM and Alx Oncology
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Alx is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Alx Oncology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alx Oncology Holdings 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 Alx Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alx Oncology Holdings has no effect on the direction of GM i.e., GM and Alx Oncology go up and down completely randomly.
Pair Corralation between GM and Alx Oncology
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.32 times more return on investment than Alx Oncology. However, General Motors is 3.12 times less risky than Alx Oncology. It trades about 0.07 of its potential returns per unit of risk. Alx Oncology Holdings is currently generating about -0.04 per unit of risk. If you would invest 3,524 in General Motors on August 28, 2024 and sell it today you would earn a total of 2,496 from holding General Motors or generate 70.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Alx Oncology Holdings
Performance |
| Timeline |
| General Motors |
| Alx Oncology Holdings |
GM and Alx Oncology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Alx Oncology
The main advantage of trading using opposite GM and Alx Oncology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Alx Oncology 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 Alx Oncology will offset losses from the drop in Alx Oncology's long position.The idea behind General Motors and Alx Oncology Holdings 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.| Alx Oncology vs. Cabaletta Bio | Alx Oncology vs. Viracta Therapeutics | Alx Oncology vs. Eyepoint Pharmaceuticals | Alx Oncology vs. Biomea Fusion |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |