Correlation Between GM and Bonus BioGroup
Can any of the company-specific risk be diversified away by investing in both GM and Bonus BioGroup 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 Bonus BioGroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Bonus BioGroup, you can compare the effects of market volatilities on GM and Bonus BioGroup 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 Bonus BioGroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Bonus BioGroup.
Diversification Opportunities for GM and Bonus BioGroup
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Bonus is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Bonus BioGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonus BioGroup 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 Bonus BioGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonus BioGroup has no effect on the direction of GM i.e., GM and Bonus BioGroup go up and down completely randomly.
Pair Corralation between GM and Bonus BioGroup
Allowing for the 90-day total investment horizon GM is expected to generate 42.92 times less return on investment than Bonus BioGroup. But when comparing it to its historical volatility, General Motors is 46.14 times less risky than Bonus BioGroup. It trades about 0.09 of its potential returns per unit of risk. Bonus BioGroup is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Bonus BioGroup on September 14, 2024 and sell it today you would earn a total of 1.00 from holding Bonus BioGroup or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Bonus BioGroup
Performance |
| Timeline |
| General Motors |
| Bonus BioGroup |
GM and Bonus BioGroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Bonus BioGroup
The main advantage of trading using opposite GM and Bonus BioGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Bonus BioGroup 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 Bonus BioGroup will offset losses from the drop in Bonus BioGroup's long position.The idea behind General Motors and Bonus BioGroup 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.| Bonus BioGroup vs. Sino Biopharmaceutical Ltd | Bonus BioGroup vs. Defence Therapeutics | Bonus BioGroup vs. Aileron Therapeutics | Bonus BioGroup vs. Enlivex Therapeutics |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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