Correlation Between GM and Jack Chia
Can any of the company-specific risk be diversified away by investing in both GM and Jack Chia 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 Jack Chia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Jack Chia Industries, you can compare the effects of market volatilities on GM and Jack Chia 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 Jack Chia. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Jack Chia.
Diversification Opportunities for GM and Jack Chia
Significant diversification
The 3 months correlation between GM and Jack is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Jack Chia Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jack Chia Industries 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 Jack Chia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jack Chia Industries has no effect on the direction of GM i.e., GM and Jack Chia go up and down completely randomly.
Pair Corralation between GM and Jack Chia
Allowing for the 90-day total investment horizon GM is expected to generate 57.4 times less return on investment than Jack Chia. But when comparing it to its historical volatility, General Motors is 50.28 times less risky than Jack Chia. It trades about 0.1 of its potential returns per unit of risk. Jack Chia Industries is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 8,025 in Jack Chia Industries on August 31, 2024 and sell it today you would earn a total of 100.00 from holding Jack Chia Industries or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
General Motors vs. Jack Chia Industries
Performance |
| Timeline |
| General Motors |
| Jack Chia Industries |
GM and Jack Chia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Jack Chia
The main advantage of trading using opposite GM and Jack Chia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Jack Chia 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 Jack Chia will offset losses from the drop in Jack Chia's long position.The idea behind General Motors and Jack Chia Industries 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.| Jack Chia vs. Kang Yong Electric | Jack Chia vs. Krungdhep Sophon Public | Jack Chia vs. KGI Securities Public | Jack Chia vs. Inoue Rubber Public |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |