Correlation Between GM and Hcm Income
Can any of the company-specific risk be diversified away by investing in both GM and Hcm Income 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 Hcm Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Hcm Income Plus, you can compare the effects of market volatilities on GM and Hcm Income 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 Hcm Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Hcm Income.
Diversification Opportunities for GM and Hcm Income
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Hcm is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Hcm Income Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hcm Income Plus 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 Hcm Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hcm Income Plus has no effect on the direction of GM i.e., GM and Hcm Income go up and down completely randomly.
Pair Corralation between GM and Hcm Income
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.32 times more return on investment than Hcm Income. However, GM is 2.32 times more volatile than Hcm Income Plus. It trades about 0.05 of its potential returns per unit of risk. Hcm Income Plus is currently generating about 0.09 per unit of risk. If you would invest 3,731 in General Motors on August 27, 2024 and sell it today you would earn a total of 2,122 from holding General Motors or generate 56.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Hcm Income Plus
Performance |
| Timeline |
| General Motors |
| Hcm Income Plus |
GM and Hcm Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Hcm Income
The main advantage of trading using opposite GM and Hcm Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Hcm Income 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 Hcm Income will offset losses from the drop in Hcm Income's long position.The idea behind General Motors and Hcm Income Plus 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.| Hcm Income vs. Hcm Dividend Sector | Hcm Income vs. Hcm Dividend Sector | Hcm Income vs. Hcm Tactical Growth | Hcm Income vs. Hcm Dynamic Income |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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