Correlation Between GM and China Enterprises
Can any of the company-specific risk be diversified away by investing in both GM and China Enterprises 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 China Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and China Enterprises Limited, you can compare the effects of market volatilities on GM and China Enterprises 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 China Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and China Enterprises.
Diversification Opportunities for GM and China Enterprises
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and China Enterprises Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Enterprises 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 China Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Enterprises has no effect on the direction of GM i.e., GM and China Enterprises go up and down completely randomly.
Pair Corralation between GM and China Enterprises
If you would invest 0.01 in China Enterprises Limited on November 9, 2024 and sell it today you would earn a total of 0.00 from holding China Enterprises Limited or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 25.0% |
| Values | Daily Returns |
General Motors vs. China Enterprises Limited
Performance |
| Timeline |
| General Motors |
| China Enterprises |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
GM and China Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and China Enterprises
The main advantage of trading using opposite GM and China Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, China Enterprises 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 China Enterprises will offset losses from the drop in China Enterprises' long position.The idea behind General Motors and China Enterprises Limited 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.| China Enterprises vs. Service Team | China Enterprises vs. American Axle Manufacturing | China Enterprises vs. Modine Manufacturing | China Enterprises vs. Aeye Inc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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