Correlation Between GM and Oriental Rise
Can any of the company-specific risk be diversified away by investing in both GM and Oriental Rise 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 Oriental Rise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Oriental Rise Holdings, you can compare the effects of market volatilities on GM and Oriental Rise 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 Oriental Rise. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Oriental Rise.
Diversification Opportunities for GM and Oriental Rise
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Oriental is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Oriental Rise Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Rise Holdings 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 Oriental Rise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Rise Holdings has no effect on the direction of GM i.e., GM and Oriental Rise go up and down completely randomly.
Pair Corralation between GM and Oriental Rise
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.39 times more return on investment than Oriental Rise. However, General Motors is 2.57 times less risky than Oriental Rise. It trades about 0.16 of its potential returns per unit of risk. Oriental Rise Holdings is currently generating about -0.08 per unit of risk. If you would invest 5,096 in General Motors on September 2, 2024 and sell it today you would earn a total of 463.00 from holding General Motors or generate 9.09% 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. Oriental Rise Holdings
Performance |
| Timeline |
| General Motors |
| Oriental Rise Holdings |
GM and Oriental Rise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Oriental Rise
The main advantage of trading using opposite GM and Oriental Rise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Oriental Rise 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 Oriental Rise will offset losses from the drop in Oriental Rise's long position.The idea behind General Motors and Oriental Rise Holdings 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.| Oriental Rise vs. Zoom Video Communications | Oriental Rise vs. Visteon Corp | Oriental Rise vs. Fidus Investment Corp | Oriental Rise vs. BorgWarner |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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