Correlation Between GM and OneApex
Can any of the company-specific risk be diversified away by investing in both GM and OneApex 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 OneApex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and OneApex Limited, you can compare the effects of market volatilities on GM and OneApex 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 OneApex. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and OneApex.
Diversification Opportunities for GM and OneApex
Excellent diversification
The 3 months correlation between GM and OneApex is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and OneApex Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OneApex Limited 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 OneApex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OneApex Limited has no effect on the direction of GM i.e., GM and OneApex go up and down completely randomly.
Pair Corralation between GM and OneApex
Allowing for the 90-day total investment horizon GM is expected to generate 2.48 times less return on investment than OneApex. But when comparing it to its historical volatility, General Motors is 4.79 times less risky than OneApex. It trades about 0.07 of its potential returns per unit of risk. OneApex Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 9.45 in OneApex Limited on August 31, 2024 and sell it today you would lose (2.25) from holding OneApex Limited or give up 23.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.16% |
| Values | Daily Returns |
General Motors vs. OneApex Limited
Performance |
| Timeline |
| General Motors |
| OneApex Limited |
GM and OneApex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and OneApex
The main advantage of trading using opposite GM and OneApex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, OneApex 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 OneApex will offset losses from the drop in OneApex's long position.The idea behind General Motors and OneApex 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.| OneApex vs. SalMar ASA | OneApex vs. Superior Plus Corp | OneApex vs. NMI Holdings | OneApex vs. Origin Agritech |
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.
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