Correlation Between GM and ECONET WIRELESS
Can any of the company-specific risk be diversified away by investing in both GM and ECONET WIRELESS 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 ECONET WIRELESS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and ECONET WIRELESS HOLDINGS, you can compare the effects of market volatilities on GM and ECONET WIRELESS 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 ECONET WIRELESS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and ECONET WIRELESS.
Diversification Opportunities for GM and ECONET WIRELESS
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and ECONET is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and ECONET WIRELESS HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECONET WIRELESS HOLDINGS 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 ECONET WIRELESS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECONET WIRELESS HOLDINGS has no effect on the direction of GM i.e., GM and ECONET WIRELESS go up and down completely randomly.
Pair Corralation between GM and ECONET WIRELESS
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.42 times more return on investment than ECONET WIRELESS. However, General Motors is 2.41 times less risky than ECONET WIRELESS. It trades about -0.15 of its potential returns per unit of risk. ECONET WIRELESS HOLDINGS is currently generating about -0.09 per unit of risk. If you would invest 5,758 in General Motors on September 14, 2024 and sell it today you would lose (498.00) from holding General Motors or give up 8.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. ECONET WIRELESS HOLDINGS
Performance |
| Timeline |
| General Motors |
| ECONET WIRELESS HOLDINGS |
GM and ECONET WIRELESS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and ECONET WIRELESS
The main advantage of trading using opposite GM and ECONET WIRELESS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, ECONET WIRELESS 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 ECONET WIRELESS will offset losses from the drop in ECONET WIRELESS's long position.The idea behind General Motors and ECONET WIRELESS HOLDINGS 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.| ECONET WIRELESS vs. STAR AFRICA PORATION | ECONET WIRELESS vs. CAFCA LIMITED | ECONET WIRELESS vs. FIRST MUTUAL PROPERTIES | ECONET WIRELESS vs. AFRICAN DISTILLERS LIMITED |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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