Correlation Between GM and Christiani Nielsen
Can any of the company-specific risk be diversified away by investing in both GM and Christiani Nielsen 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 Christiani Nielsen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Christiani Nielsen Public, you can compare the effects of market volatilities on GM and Christiani Nielsen 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 Christiani Nielsen. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Christiani Nielsen.
Diversification Opportunities for GM and Christiani Nielsen
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GM and Christiani is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Christiani Nielsen Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Christiani Nielsen 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 Christiani Nielsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Christiani Nielsen Public has no effect on the direction of GM i.e., GM and Christiani Nielsen go up and down completely randomly.
Pair Corralation between GM and Christiani Nielsen
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.38 times more return on investment than Christiani Nielsen. However, GM is 1.38 times more volatile than Christiani Nielsen Public. It trades about -0.06 of its potential returns per unit of risk. Christiani Nielsen Public is currently generating about -0.37 per unit of risk. If you would invest 5,177 in General Motors on November 4, 2024 and sell it today you would lose (231.00) from holding General Motors or give up 4.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
General Motors vs. Christiani Nielsen Public
Performance |
| Timeline |
| General Motors |
| Christiani Nielsen Public |
GM and Christiani Nielsen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Christiani Nielsen
The main advantage of trading using opposite GM and Christiani Nielsen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Christiani Nielsen 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 Christiani Nielsen will offset losses from the drop in Christiani Nielsen's long position.The idea behind General Motors and Christiani Nielsen 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.| Christiani Nielsen vs. CH Karnchang Public | Christiani Nielsen vs. Italian Thai Development Public | Christiani Nielsen vs. EMC Public | Christiani Nielsen vs. AAPICO Hitech Public |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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