Correlation Between GM and Data Agro
Can any of the company-specific risk be diversified away by investing in both GM and Data Agro 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 Data Agro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Data Agro, you can compare the effects of market volatilities on GM and Data Agro 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 Data Agro. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Data Agro.
Diversification Opportunities for GM and Data Agro
Very good diversification
The 3 months correlation between GM and Data is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Data Agro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Agro 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 Data Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Agro has no effect on the direction of GM i.e., GM and Data Agro go up and down completely randomly.
Pair Corralation between GM and Data Agro
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.38 times more return on investment than Data Agro. However, GM is 1.38 times more volatile than Data Agro. It trades about 0.16 of its potential returns per unit of risk. Data Agro is currently generating about -0.26 per unit of risk. If you would invest 5,096 in General Motors on September 2, 2024 and sell it today you would earn a total of 463.00 from holding General Motors or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Data Agro
Performance |
| Timeline |
| General Motors |
| Data Agro |
GM and Data Agro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Data Agro
The main advantage of trading using opposite GM and Data Agro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Data Agro 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 Data Agro will offset losses from the drop in Data Agro's long position.The idea behind General Motors and Data Agro 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.| Data Agro vs. Jubilee Life Insurance | Data Agro vs. Engro Polymer Chemicals | Data Agro vs. Ghani Chemical Industries | Data Agro vs. The Organic Meat |
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
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |