Correlation Between GM and ANHUI CONCH
Can any of the company-specific risk be diversified away by investing in both GM and ANHUI CONCH 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 ANHUI CONCH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and ANHUI CH H , you can compare the effects of market volatilities on GM and ANHUI CONCH 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 ANHUI CONCH. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and ANHUI CONCH.
Diversification Opportunities for GM and ANHUI CONCH
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and ANHUI is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and ANHUI CH H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANHUI CONCH 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 ANHUI CONCH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANHUI CONCH has no effect on the direction of GM i.e., GM and ANHUI CONCH go up and down completely randomly.
Pair Corralation between GM and ANHUI CONCH
Allowing for the 90-day total investment horizon GM is expected to generate 3.5 times less return on investment than ANHUI CONCH. But when comparing it to its historical volatility, General Motors is 3.3 times less risky than ANHUI CONCH. It trades about 0.16 of its potential returns per unit of risk. ANHUI CH H is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 259.00 in ANHUI CH H on September 2, 2024 and sell it today you would earn a total of 82.00 from holding ANHUI CH H or generate 31.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. ANHUI CH H
Performance |
| Timeline |
| General Motors |
| ANHUI CONCH |
GM and ANHUI CONCH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and ANHUI CONCH
The main advantage of trading using opposite GM and ANHUI CONCH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, ANHUI CONCH 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 ANHUI CONCH will offset losses from the drop in ANHUI CONCH's long position.The idea behind General Motors and ANHUI CH H 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.| ANHUI CONCH vs. Adtalem Global Education | ANHUI CONCH vs. EEDUCATION ALBERT AB | ANHUI CONCH vs. FORWARD AIR P | ANHUI CONCH vs. HF SINCLAIR P |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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