Correlation Between GM and Angkor Resources
Can any of the company-specific risk be diversified away by investing in both GM and Angkor Resources 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 Angkor Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Angkor Resources Corp, you can compare the effects of market volatilities on GM and Angkor Resources 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 Angkor Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Angkor Resources.
Diversification Opportunities for GM and Angkor Resources
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Angkor is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Angkor Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angkor Resources Corp 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 Angkor Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Angkor Resources Corp has no effect on the direction of GM i.e., GM and Angkor Resources go up and down completely randomly.
Pair Corralation between GM and Angkor Resources
Allowing for the 90-day total investment horizon GM is expected to generate 2.38 times less return on investment than Angkor Resources. But when comparing it to its historical volatility, General Motors is 3.05 times less risky than Angkor Resources. It trades about 0.05 of its potential returns per unit of risk. Angkor Resources Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8.00 in Angkor Resources Corp on August 31, 2024 and sell it today you would earn a total of 1.50 from holding Angkor Resources Corp or generate 18.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
General Motors vs. Angkor Resources Corp
Performance |
| Timeline |
| General Motors |
| Angkor Resources Corp |
GM and Angkor Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Angkor Resources
The main advantage of trading using opposite GM and Angkor Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Angkor Resources 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 Angkor Resources will offset losses from the drop in Angkor Resources' long position.The idea behind General Motors and Angkor Resources Corp 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.| Angkor Resources vs. Solar Alliance Energy | Angkor Resources vs. Global X Active | Angkor Resources vs. Financial 15 Split | Angkor Resources vs. Rubicon Organics |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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