Correlation Between GM and Cloudweb
Can any of the company-specific risk be diversified away by investing in both GM and Cloudweb 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 Cloudweb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Cloudweb, you can compare the effects of market volatilities on GM and Cloudweb 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 Cloudweb. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Cloudweb.
Diversification Opportunities for GM and Cloudweb
Average diversification
The 3 months correlation between GM and Cloudweb is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Cloudweb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloudweb 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 Cloudweb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloudweb has no effect on the direction of GM i.e., GM and Cloudweb go up and down completely randomly.
Pair Corralation between GM and Cloudweb
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.22 times more return on investment than Cloudweb. However, General Motors is 4.53 times less risky than Cloudweb. It trades about 0.12 of its potential returns per unit of risk. Cloudweb is currently generating about 0.01 per unit of risk. If you would invest 5,197 in General Motors on August 31, 2024 and sell it today you would earn a total of 353.00 from holding General Motors or generate 6.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Cloudweb
Performance |
| Timeline |
| General Motors |
| Cloudweb |
GM and Cloudweb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Cloudweb
The main advantage of trading using opposite GM and Cloudweb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Cloudweb 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 Cloudweb will offset losses from the drop in Cloudweb's long position.The idea behind General Motors and Cloudweb 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.| Cloudweb vs. Porsche Automobile Holding | Cloudweb vs. Ferrari NV | Cloudweb vs. Toyota Motor | Cloudweb vs. General Motors |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| CEOs Directory Screen CEOs from public companies around the world |