Correlation Between GM and Bikaji Foods
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By analyzing existing cross correlation between General Motors and Bikaji Foods International, you can compare the effects of market volatilities on GM and Bikaji Foods 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 Bikaji Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Bikaji Foods.
Diversification Opportunities for GM and Bikaji Foods
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Bikaji is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Bikaji Foods International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bikaji Foods Interna 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 Bikaji Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bikaji Foods Interna has no effect on the direction of GM i.e., GM and Bikaji Foods go up and down completely randomly.
Pair Corralation between GM and Bikaji Foods
Allowing for the 90-day total investment horizon GM is expected to generate 1.56 times less return on investment than Bikaji Foods. But when comparing it to its historical volatility, General Motors is 1.06 times less risky than Bikaji Foods. It trades about 0.07 of its potential returns per unit of risk. Bikaji Foods International is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 38,871 in Bikaji Foods International on August 31, 2024 and sell it today you would earn a total of 41,399 from holding Bikaji Foods International or generate 106.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.4% |
| Values | Daily Returns |
General Motors vs. Bikaji Foods International
Performance |
| Timeline |
| General Motors |
| Bikaji Foods Interna |
GM and Bikaji Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Bikaji Foods
The main advantage of trading using opposite GM and Bikaji Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Bikaji Foods 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 Bikaji Foods will offset losses from the drop in Bikaji Foods' long position.The idea behind General Motors and Bikaji Foods International 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.| Bikaji Foods vs. MRF Limited | Bikaji Foods vs. Bosch Limited | Bikaji Foods vs. Bajaj Holdings Investment | Bikaji Foods vs. Vardhman Holdings Limited |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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