Correlation Between GM and PTC INDUSTRIES
Can any of the company-specific risk be diversified away by investing in both GM and PTC INDUSTRIES 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 PTC INDUSTRIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and PTC INDUSTRIES LTD, you can compare the effects of market volatilities on GM and PTC INDUSTRIES 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 PTC INDUSTRIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and PTC INDUSTRIES.
Diversification Opportunities for GM and PTC INDUSTRIES
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and PTC is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and PTC INDUSTRIES LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC INDUSTRIES LTD 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 PTC INDUSTRIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC INDUSTRIES LTD has no effect on the direction of GM i.e., GM and PTC INDUSTRIES go up and down completely randomly.
Pair Corralation between GM and PTC INDUSTRIES
Allowing for the 90-day total investment horizon GM is expected to generate 1.71 times less return on investment than PTC INDUSTRIES. But when comparing it to its historical volatility, General Motors is 1.9 times less risky than PTC INDUSTRIES. It trades about 0.11 of its potential returns per unit of risk. PTC INDUSTRIES LTD is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 551,115 in PTC INDUSTRIES LTD on September 2, 2024 and sell it today you would earn a total of 645,745 from holding PTC INDUSTRIES LTD or generate 117.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 97.58% |
| Values | Daily Returns |
General Motors vs. PTC INDUSTRIES LTD
Performance |
| Timeline |
| General Motors |
| PTC INDUSTRIES LTD |
GM and PTC INDUSTRIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and PTC INDUSTRIES
The main advantage of trading using opposite GM and PTC INDUSTRIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, PTC INDUSTRIES 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 PTC INDUSTRIES will offset losses from the drop in PTC INDUSTRIES's long position.The idea behind General Motors and PTC INDUSTRIES 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.| PTC INDUSTRIES vs. The Orissa Minerals | PTC INDUSTRIES vs. Malu Paper Mills | PTC INDUSTRIES vs. Kingfa Science Technology | PTC INDUSTRIES vs. Rico Auto Industries |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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