Correlation Between GM and CEC AFRICA
Can any of the company-specific risk be diversified away by investing in both GM and CEC AFRICA 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 CEC AFRICA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and CEC AFRICA INVESTMENTS, you can compare the effects of market volatilities on GM and CEC AFRICA 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 CEC AFRICA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and CEC AFRICA.
Diversification Opportunities for GM and CEC AFRICA
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GM and CEC is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and CEC AFRICA INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEC AFRICA INVESTMENTS 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 CEC AFRICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEC AFRICA INVESTMENTS has no effect on the direction of GM i.e., GM and CEC AFRICA go up and down completely randomly.
Pair Corralation between GM and CEC AFRICA
Allowing for the 90-day total investment horizon General Motors is expected to generate 4.48 times more return on investment than CEC AFRICA. However, GM is 4.48 times more volatile than CEC AFRICA INVESTMENTS. It trades about 0.1 of its potential returns per unit of risk. CEC AFRICA INVESTMENTS is currently generating about 0.09 per unit of risk. If you would invest 4,829 in General Motors on September 2, 2024 and sell it today you would earn a total of 730.00 from holding General Motors or generate 15.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
General Motors vs. CEC AFRICA INVESTMENTS
Performance |
Timeline |
General Motors |
CEC AFRICA INVESTMENTS |
GM and CEC AFRICA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and CEC AFRICA
The main advantage of trading using opposite GM and CEC AFRICA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, CEC AFRICA 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 CEC AFRICA will offset losses from the drop in CEC AFRICA's long position.The idea behind General Motors and CEC AFRICA INVESTMENTS 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.CEC AFRICA vs. AECI MINING EXPLOSIVES | CEC AFRICA vs. BRITISH AMERICAN TOBACCO ZAMBIA | CEC AFRICA vs. AIRTEL NETWORKS ZAMBIA | CEC AFRICA vs. NATIONAL BREWERIES PLC |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data |