Correlation Between GM and BPS TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both GM and BPS TECHNOLOGY 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 BPS TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and BPS TECHNOLOGY PUBLIC, you can compare the effects of market volatilities on GM and BPS TECHNOLOGY 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 BPS TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and BPS TECHNOLOGY.
Diversification Opportunities for GM and BPS TECHNOLOGY
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and BPS is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and BPS TECHNOLOGY PUBLIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BPS TECHNOLOGY PUBLIC 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 BPS TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BPS TECHNOLOGY PUBLIC has no effect on the direction of GM i.e., GM and BPS TECHNOLOGY go up and down completely randomly.
Pair Corralation between GM and BPS TECHNOLOGY
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.53 times more return on investment than BPS TECHNOLOGY. However, General Motors is 1.9 times less risky than BPS TECHNOLOGY. It trades about 0.24 of its potential returns per unit of risk. BPS TECHNOLOGY PUBLIC is currently generating about -0.24 per unit of risk. If you would invest 5,272 in General Motors on August 25, 2024 and sell it today you would earn a total of 581.00 from holding General Motors or generate 11.02% 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. BPS TECHNOLOGY PUBLIC
Performance |
| Timeline |
| General Motors |
| BPS TECHNOLOGY PUBLIC |
GM and BPS TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and BPS TECHNOLOGY
The main advantage of trading using opposite GM and BPS TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, BPS TECHNOLOGY 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 BPS TECHNOLOGY will offset losses from the drop in BPS TECHNOLOGY's long position.The idea behind General Motors and BPS TECHNOLOGY PUBLIC 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.| BPS TECHNOLOGY vs. Delta Electronics Public | BPS TECHNOLOGY vs. Delta Electronics Public | BPS TECHNOLOGY vs. Airports of Thailand | BPS TECHNOLOGY vs. Airports of Thailand |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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