Correlation Between GM and Handeni Gold
Can any of the company-specific risk be diversified away by investing in both GM and Handeni Gold 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 Handeni Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Handeni Gold, you can compare the effects of market volatilities on GM and Handeni Gold 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 Handeni Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Handeni Gold.
Diversification Opportunities for GM and Handeni Gold
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GM and Handeni is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Handeni Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Handeni Gold 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 Handeni Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Handeni Gold has no effect on the direction of GM i.e., GM and Handeni Gold go up and down completely randomly.
Pair Corralation between GM and Handeni Gold
Allowing for the 90-day total investment horizon GM is expected to generate 4.78 times less return on investment than Handeni Gold. But when comparing it to its historical volatility, General Motors is 6.14 times less risky than Handeni Gold. It trades about 0.05 of its potential returns per unit of risk. Handeni Gold is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.02 in Handeni Gold on September 24, 2024 and sell it today you would earn a total of 0.00 from holding Handeni Gold or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Handeni Gold
Performance |
| Timeline |
| General Motors |
| Handeni Gold |
GM and Handeni Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Handeni Gold
The main advantage of trading using opposite GM and Handeni Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Handeni Gold 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 Handeni Gold will offset losses from the drop in Handeni Gold's long position.The idea behind General Motors and Handeni Gold 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.| Handeni Gold vs. Lion One Metals | Handeni Gold vs. Westhaven Gold Corp | Handeni Gold vs. Satori Resources | Handeni Gold vs. Wesdome Gold Mines |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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