Correlation Between GM and COSCO SHIPPING
Can any of the company-specific risk be diversified away by investing in both GM and COSCO SHIPPING 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 COSCO SHIPPING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and COSCO SHIPPING Development, you can compare the effects of market volatilities on GM and COSCO SHIPPING 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 COSCO SHIPPING. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and COSCO SHIPPING.
Diversification Opportunities for GM and COSCO SHIPPING
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and COSCO is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and COSCO SHIPPING Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCO SHIPPING Devel 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 COSCO SHIPPING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCO SHIPPING Devel has no effect on the direction of GM i.e., GM and COSCO SHIPPING go up and down completely randomly.
Pair Corralation between GM and COSCO SHIPPING
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.87 times more return on investment than COSCO SHIPPING. However, GM is 2.87 times more volatile than COSCO SHIPPING Development. It trades about 0.05 of its potential returns per unit of risk. COSCO SHIPPING Development is currently generating about 0.02 per unit of risk. If you would invest 3,805 in General Motors on September 3, 2024 and sell it today you would earn a total of 1,754 from holding General Motors or generate 46.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. COSCO SHIPPING Development
Performance |
| Timeline |
| General Motors |
| COSCO SHIPPING Devel |
GM and COSCO SHIPPING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and COSCO SHIPPING
The main advantage of trading using opposite GM and COSCO SHIPPING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, COSCO SHIPPING 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 COSCO SHIPPING will offset losses from the drop in COSCO SHIPPING's long position.The idea behind General Motors and COSCO SHIPPING Development 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.| COSCO SHIPPING vs. SITC International Holdings | COSCO SHIPPING vs. COSCO SHIPPING Holdings | COSCO SHIPPING vs. Nippon Yusen Kabushiki | COSCO SHIPPING vs. Western Bulk Chartering |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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