Correlation Between GM and Can Fite
Can any of the company-specific risk be diversified away by investing in both GM and Can Fite 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 Can Fite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Can Fite Biopharma, you can compare the effects of market volatilities on GM and Can Fite 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 Can Fite. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Can Fite.
Diversification Opportunities for GM and Can Fite
Good diversification
The 3 months correlation between GM and Can is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Can Fite Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Can Fite Biopharma 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 Can Fite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Can Fite Biopharma has no effect on the direction of GM i.e., GM and Can Fite go up and down completely randomly.
Pair Corralation between GM and Can Fite
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.47 times more return on investment than Can Fite. However, General Motors is 2.14 times less risky than Can Fite. It trades about 0.05 of its potential returns per unit of risk. Can Fite Biopharma is currently generating about -0.04 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 | 100.0% |
| Values | Daily Returns |
General Motors vs. Can Fite Biopharma
Performance |
| Timeline |
| General Motors |
| Can Fite Biopharma |
GM and Can Fite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Can Fite
The main advantage of trading using opposite GM and Can Fite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Can Fite 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 Can Fite will offset losses from the drop in Can Fite's long position.The idea behind General Motors and Can Fite Biopharma 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.| Can Fite vs. ImmuCell | Can Fite vs. Compugen | Can Fite vs. Evogene | Can Fite vs. Collplant Biotechnologies |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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