Correlation Between GM and Bioscience Animal
Can any of the company-specific risk be diversified away by investing in both GM and Bioscience Animal 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 Bioscience Animal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Bioscience Animal Health, you can compare the effects of market volatilities on GM and Bioscience Animal 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 Bioscience Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Bioscience Animal.
Diversification Opportunities for GM and Bioscience Animal
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Bioscience is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Bioscience Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioscience Animal Health 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 Bioscience Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bioscience Animal Health has no effect on the direction of GM i.e., GM and Bioscience Animal go up and down completely randomly.
Pair Corralation between GM and Bioscience Animal
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.97 times more return on investment than Bioscience Animal. However, General Motors is 1.03 times less risky than Bioscience Animal. It trades about 0.05 of its potential returns per unit of risk. Bioscience Animal Health is currently generating about -0.07 per unit of risk. If you would invest 3,757 in General Motors on August 30, 2024 and sell it today you would earn a total of 1,793 from holding General Motors or generate 47.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.17% |
| Values | Daily Returns |
General Motors vs. Bioscience Animal Health
Performance |
| Timeline |
| General Motors |
| Bioscience Animal Health |
GM and Bioscience Animal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Bioscience Animal
The main advantage of trading using opposite GM and Bioscience Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Bioscience Animal 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 Bioscience Animal will offset losses from the drop in Bioscience Animal's long position.The idea behind General Motors and Bioscience Animal Health 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.| Bioscience Animal vs. Knight Club Capital | Bioscience Animal vs. Chamni Eye PCL | Bioscience Animal vs. Bless Asset Group | Bioscience Animal vs. CAZ Public |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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