Correlation Between GM and Golden Heaven
Can any of the company-specific risk be diversified away by investing in both GM and Golden Heaven 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 Golden Heaven into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Golden Heaven Group, you can compare the effects of market volatilities on GM and Golden Heaven 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 Golden Heaven. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Golden Heaven.
Diversification Opportunities for GM and Golden Heaven
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and Golden is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Golden Heaven Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Heaven Group 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 Golden Heaven. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Heaven Group has no effect on the direction of GM i.e., GM and Golden Heaven go up and down completely randomly.
Pair Corralation between GM and Golden Heaven
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.31 times more return on investment than Golden Heaven. However, General Motors is 3.18 times less risky than Golden Heaven. It trades about 0.02 of its potential returns per unit of risk. Golden Heaven Group is currently generating about -0.15 per unit of risk. If you would invest 4,540 in General Motors on November 28, 2024 and sell it today you would earn a total of 131.00 from holding General Motors or generate 2.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Golden Heaven Group
Performance |
| Timeline |
| General Motors |
| Golden Heaven Group |
GM and Golden Heaven Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Golden Heaven
The main advantage of trading using opposite GM and Golden Heaven positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Golden Heaven 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 Golden Heaven will offset losses from the drop in Golden Heaven's long position.The idea behind General Motors and Golden Heaven Group 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.| Golden Heaven vs. Hurco Companies | Golden Heaven vs. FMC Corporation | Golden Heaven vs. FTAI Aviation Ltd | Golden Heaven vs. Cementos Pacasmayo SAA |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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