Correlation Between GM and Gulistan Spinning
Can any of the company-specific risk be diversified away by investing in both GM and Gulistan Spinning 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 Gulistan Spinning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Gulistan Spinning Mills, you can compare the effects of market volatilities on GM and Gulistan Spinning 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 Gulistan Spinning. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Gulistan Spinning.
Diversification Opportunities for GM and Gulistan Spinning
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Gulistan is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Gulistan Spinning Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulistan Spinning Mills 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 Gulistan Spinning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulistan Spinning Mills has no effect on the direction of GM i.e., GM and Gulistan Spinning go up and down completely randomly.
Pair Corralation between GM and Gulistan Spinning
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Gulistan Spinning. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 2.42 times less risky than Gulistan Spinning. The stock trades about -0.14 of its potential returns per unit of risk. The Gulistan Spinning Mills is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 823.00 in Gulistan Spinning Mills on September 12, 2024 and sell it today you would earn a total of 53.00 from holding Gulistan Spinning Mills or generate 6.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
General Motors vs. Gulistan Spinning Mills
Performance |
| Timeline |
| General Motors |
| Gulistan Spinning Mills |
GM and Gulistan Spinning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Gulistan Spinning
The main advantage of trading using opposite GM and Gulistan Spinning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Gulistan Spinning 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 Gulistan Spinning will offset losses from the drop in Gulistan Spinning's long position.The idea behind General Motors and Gulistan Spinning Mills 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.| Gulistan Spinning vs. Orient Rental Modaraba | Gulistan Spinning vs. Air Link Communication | Gulistan Spinning vs. Habib Insurance | Gulistan Spinning vs. Pak Gulf Leasing |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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