Correlation Between GM and Ceylon Graphite
Can any of the company-specific risk be diversified away by investing in both GM and Ceylon Graphite 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 Ceylon Graphite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Ceylon Graphite Corp, you can compare the effects of market volatilities on GM and Ceylon Graphite 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 Ceylon Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Ceylon Graphite.
Diversification Opportunities for GM and Ceylon Graphite
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Ceylon is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Ceylon Graphite Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceylon Graphite Corp 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 Ceylon Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceylon Graphite Corp has no effect on the direction of GM i.e., GM and Ceylon Graphite go up and down completely randomly.
Pair Corralation between GM and Ceylon Graphite
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.21 times more return on investment than Ceylon Graphite. However, General Motors is 4.87 times less risky than Ceylon Graphite. It trades about 0.14 of its potential returns per unit of risk. Ceylon Graphite Corp is currently generating about 0.01 per unit of risk. If you would invest 3,135 in General Motors on August 26, 2024 and sell it today you would earn a total of 2,718 from holding General Motors or generate 86.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
General Motors vs. Ceylon Graphite Corp
Performance |
| Timeline |
| General Motors |
| Ceylon Graphite Corp |
GM and Ceylon Graphite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Ceylon Graphite
The main advantage of trading using opposite GM and Ceylon Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Ceylon Graphite 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 Ceylon Graphite will offset losses from the drop in Ceylon Graphite's long position.The idea behind General Motors and Ceylon Graphite Corp 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.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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Transaction History View history of all your transactions and understand their impact on performance |