Correlation Between GM and Qualitech Public
Can any of the company-specific risk be diversified away by investing in both GM and Qualitech Public 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 Qualitech Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Qualitech Public, you can compare the effects of market volatilities on GM and Qualitech Public 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 Qualitech Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Qualitech Public.
Diversification Opportunities for GM and Qualitech Public
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Qualitech is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Qualitech Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qualitech Public 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 Qualitech Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qualitech Public has no effect on the direction of GM i.e., GM and Qualitech Public go up and down completely randomly.
Pair Corralation between GM and Qualitech Public
Allowing for the 90-day total investment horizon GM is expected to generate 16.67 times less return on investment than Qualitech Public. But when comparing it to its historical volatility, General Motors is 26.63 times less risky than Qualitech Public. It trades about 0.07 of its potential returns per unit of risk. Qualitech Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 500.00 in Qualitech Public on August 31, 2024 and sell it today you would lose (290.00) from holding Qualitech Public or give up 58.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.06% |
| Values | Daily Returns |
General Motors vs. Qualitech Public
Performance |
| Timeline |
| General Motors |
| Qualitech Public |
GM and Qualitech Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Qualitech Public
The main advantage of trading using opposite GM and Qualitech Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Qualitech Public 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 Qualitech Public will offset losses from the drop in Qualitech Public's long position.The idea behind General Motors and Qualitech Public 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.| Qualitech Public vs. Premier Technology Public | Qualitech Public vs. Sea Oil Public | Qualitech Public vs. Thai Mitsuwa Public | Qualitech Public vs. The Erawan Group |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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