Correlation Between GM and BioAdaptives
Can any of the company-specific risk be diversified away by investing in both GM and BioAdaptives 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 BioAdaptives into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and BioAdaptives, you can compare the effects of market volatilities on GM and BioAdaptives 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 BioAdaptives. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and BioAdaptives.
Diversification Opportunities for GM and BioAdaptives
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and BioAdaptives is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and BioAdaptives in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioAdaptives 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 BioAdaptives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioAdaptives has no effect on the direction of GM i.e., GM and BioAdaptives go up and down completely randomly.
Pair Corralation between GM and BioAdaptives
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the BioAdaptives. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 9.66 times less risky than BioAdaptives. The stock trades about -0.05 of its potential returns per unit of risk. The BioAdaptives is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 5.75 in BioAdaptives on November 3, 2024 and sell it today you would earn a total of 4.25 from holding BioAdaptives or generate 73.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. BioAdaptives
Performance |
| Timeline |
| General Motors |
| BioAdaptives |
GM and BioAdaptives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and BioAdaptives
The main advantage of trading using opposite GM and BioAdaptives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, BioAdaptives 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 BioAdaptives will offset losses from the drop in BioAdaptives' long position.The idea behind General Motors and BioAdaptives 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.| BioAdaptives vs. Nates Food Co | BioAdaptives vs. Qed Connect | BioAdaptives vs. Branded Legacy | BioAdaptives vs. Grand Havana |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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