Correlation Between GM and Aboitiz Power
Can any of the company-specific risk be diversified away by investing in both GM and Aboitiz Power 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 Aboitiz Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Aboitiz Power Corp, you can compare the effects of market volatilities on GM and Aboitiz Power 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 Aboitiz Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Aboitiz Power.
Diversification Opportunities for GM and Aboitiz Power
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Aboitiz is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Aboitiz Power Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aboitiz Power 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 Aboitiz Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aboitiz Power Corp has no effect on the direction of GM i.e., GM and Aboitiz Power go up and down completely randomly.
Pair Corralation between GM and Aboitiz Power
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Aboitiz Power. In addition to that, GM is 2.93 times more volatile than Aboitiz Power Corp. It trades about -0.15 of its total potential returns per unit of risk. Aboitiz Power Corp is currently generating about -0.02 per unit of volatility. If you would invest 3,690 in Aboitiz Power Corp on September 15, 2024 and sell it today you would lose (20.00) from holding Aboitiz Power Corp or give up 0.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
General Motors vs. Aboitiz Power Corp
Performance |
| Timeline |
| General Motors |
| Aboitiz Power Corp |
GM and Aboitiz Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Aboitiz Power
The main advantage of trading using opposite GM and Aboitiz Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Aboitiz Power 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 Aboitiz Power will offset losses from the drop in Aboitiz Power's long position.The idea behind General Motors and Aboitiz Power 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.| Aboitiz Power vs. Dizon Copper Silver | Aboitiz Power vs. GT Capital Holdings | Aboitiz Power vs. Allhome Corp | Aboitiz Power vs. Jollibee Foods Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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