Correlation Between GM and Oberweis China
Can any of the company-specific risk be diversified away by investing in both GM and Oberweis China 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 Oberweis China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Oberweis China Opportunities, you can compare the effects of market volatilities on GM and Oberweis China 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 Oberweis China. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Oberweis China.
Diversification Opportunities for GM and Oberweis China
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Oberweis is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Oberweis China Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberweis China Oppor 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 Oberweis China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oberweis China Oppor has no effect on the direction of GM i.e., GM and Oberweis China go up and down completely randomly.
Pair Corralation between GM and Oberweis China
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Oberweis China. In addition to that, GM is 1.13 times more volatile than Oberweis China Opportunities. It trades about -0.32 of its total potential returns per unit of risk. Oberweis China Opportunities is currently generating about 0.35 per unit of volatility. If you would invest 702.00 in Oberweis China Opportunities on November 28, 2024 and sell it today you would earn a total of 110.00 from holding Oberweis China Opportunities or generate 15.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Oberweis China Opportunities
Performance |
| Timeline |
| General Motors |
| Oberweis China Oppor |
GM and Oberweis China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Oberweis China
The main advantage of trading using opposite GM and Oberweis China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Oberweis China 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 Oberweis China will offset losses from the drop in Oberweis China's long position.The idea behind General Motors and Oberweis China Opportunities 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.| Oberweis China vs. Gmo High Yield | Oberweis China vs. Goldman Sachs High | Oberweis China vs. Access Flex High | Oberweis China vs. Ab High 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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