Correlation Between GM and OKYO Pharma
Can any of the company-specific risk be diversified away by investing in both GM and OKYO Pharma 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 OKYO Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and OKYO Pharma Ltd, you can compare the effects of market volatilities on GM and OKYO Pharma 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 OKYO Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and OKYO Pharma.
Diversification Opportunities for GM and OKYO Pharma
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and OKYO is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and OKYO Pharma Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OKYO Pharma 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 OKYO Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OKYO Pharma has no effect on the direction of GM i.e., GM and OKYO Pharma go up and down completely randomly.
Pair Corralation between GM and OKYO Pharma
Allowing for the 90-day total investment horizon GM is expected to generate 1.16 times less return on investment than OKYO Pharma. But when comparing it to its historical volatility, General Motors is 3.72 times less risky than OKYO Pharma. It trades about 0.05 of its potential returns per unit of risk. OKYO Pharma Ltd is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 223.00 in OKYO Pharma Ltd on August 26, 2024 and sell it today you would lose (118.00) from holding OKYO Pharma Ltd or give up 52.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. OKYO Pharma Ltd
Performance |
| Timeline |
| General Motors |
| OKYO Pharma |
GM and OKYO Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and OKYO Pharma
The main advantage of trading using opposite GM and OKYO Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, OKYO Pharma 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 OKYO Pharma will offset losses from the drop in OKYO Pharma's long position.The idea behind General Motors and OKYO Pharma Ltd 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.| OKYO Pharma vs. Candel Therapeutics | OKYO Pharma vs. Anebulo Pharmaceuticals | OKYO Pharma vs. Cingulate Warrants | OKYO Pharma vs. Unicycive Therapeutics |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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