Correlation Between GM and Chakana Copper
Can any of the company-specific risk be diversified away by investing in both GM and Chakana Copper 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 Chakana Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Chakana Copper Corp, you can compare the effects of market volatilities on GM and Chakana Copper 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 Chakana Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Chakana Copper.
Diversification Opportunities for GM and Chakana Copper
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Chakana is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Chakana Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chakana Copper Corp 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 Chakana Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chakana Copper Corp has no effect on the direction of GM i.e., GM and Chakana Copper go up and down completely randomly.
Pair Corralation between GM and Chakana Copper
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.25 times more return on investment than Chakana Copper. However, General Motors is 3.97 times less risky than Chakana Copper. It trades about 0.08 of its potential returns per unit of risk. Chakana Copper Corp is currently generating about -0.04 per unit of risk. If you would invest 4,539 in General Motors on September 3, 2024 and sell it today you would earn a total of 965.00 from holding General Motors or generate 21.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Chakana Copper Corp
Performance |
| Timeline |
| General Motors |
| Chakana Copper Corp |
GM and Chakana Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Chakana Copper
The main advantage of trading using opposite GM and Chakana Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Chakana Copper 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 Chakana Copper will offset losses from the drop in Chakana Copper's long position.The idea behind General Motors and Chakana Copper Corp 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.| Chakana Copper vs. Libero Copper Corp | Chakana Copper vs. Scottie Resources Corp | Chakana Copper vs. PJX Resources | Chakana Copper vs. Rugby Mining Limited |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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