Correlation Between GM and Qualstar
Can any of the company-specific risk be diversified away by investing in both GM and Qualstar 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 Qualstar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Qualstar, you can compare the effects of market volatilities on GM and Qualstar 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 Qualstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Qualstar.
Diversification Opportunities for GM and Qualstar
Very good diversification
The 3 months correlation between GM and Qualstar is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Qualstar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qualstar 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 Qualstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qualstar has no effect on the direction of GM i.e., GM and Qualstar go up and down completely randomly.
Pair Corralation between GM and Qualstar
If you would invest 5,197 in General Motors on August 31, 2024 and sell it today you would earn a total of 353.00 from holding General Motors or generate 6.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
General Motors vs. Qualstar
Performance |
| Timeline |
| General Motors |
| Qualstar |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Qualstar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Qualstar
The main advantage of trading using opposite GM and Qualstar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Qualstar 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 Qualstar will offset losses from the drop in Qualstar's long position.The idea behind General Motors and Qualstar 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.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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |