Correlation Between GM and HCL Technologies
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By analyzing existing cross correlation between General Motors and HCL Technologies Limited, you can compare the effects of market volatilities on GM and HCL Technologies 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 HCL Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and HCL Technologies.
Diversification Opportunities for GM and HCL Technologies
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and HCL is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and HCL Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCL Technologies 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 HCL Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCL Technologies has no effect on the direction of GM i.e., GM and HCL Technologies go up and down completely randomly.
Pair Corralation between GM and HCL Technologies
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.22 times more return on investment than HCL Technologies. However, GM is 1.22 times more volatile than HCL Technologies Limited. It trades about 0.32 of its potential returns per unit of risk. HCL Technologies Limited is currently generating about 0.04 per unit of risk. If you would invest 5,273 in General Motors on August 28, 2024 and sell it today you would earn a total of 747.00 from holding General Motors or generate 14.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 90.48% |
Values | Daily Returns |
General Motors vs. HCL Technologies Limited
Performance |
Timeline |
General Motors |
HCL Technologies |
GM and HCL Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and HCL Technologies
The main advantage of trading using opposite GM and HCL Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, HCL Technologies 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 HCL Technologies will offset losses from the drop in HCL Technologies' long position.The idea behind General Motors and HCL Technologies Limited 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.HCL Technologies vs. Kingfa Science Technology | HCL Technologies vs. Rico Auto Industries | HCL Technologies vs. GACM Technologies Limited | HCL Technologies vs. COSMO FIRST 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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