Correlation Between GM and Gyre Therapeutics
Can any of the company-specific risk be diversified away by investing in both GM and Gyre Therapeutics 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 Gyre Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Gyre Therapeutics, you can compare the effects of market volatilities on GM and Gyre Therapeutics 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 Gyre Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Gyre Therapeutics.
Diversification Opportunities for GM and Gyre Therapeutics
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and Gyre is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Gyre Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gyre Therapeutics 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 Gyre Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gyre Therapeutics has no effect on the direction of GM i.e., GM and Gyre Therapeutics go up and down completely randomly.
Pair Corralation between GM and Gyre Therapeutics
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.43 times more return on investment than Gyre Therapeutics. However, General Motors is 2.3 times less risky than Gyre Therapeutics. It trades about 0.26 of its potential returns per unit of risk. Gyre Therapeutics is currently generating about -0.23 per unit of risk. If you would invest 5,273 in General Motors on August 27, 2024 and sell it today you would earn a total of 580.00 from holding General Motors or generate 11.0% 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. Gyre Therapeutics
Performance |
| Timeline |
| General Motors |
| Gyre Therapeutics |
GM and Gyre Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Gyre Therapeutics
The main advantage of trading using opposite GM and Gyre Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Gyre Therapeutics 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 Gyre Therapeutics will offset losses from the drop in Gyre Therapeutics' long position.The idea behind General Motors and Gyre Therapeutics 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.| Gyre Therapeutics vs. Golden Matrix Group | Gyre Therapeutics vs. NetEase | Gyre Therapeutics vs. Electronic Arts | Gyre Therapeutics vs. QBE Insurance Group |
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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