Correlation Between GM and NaturalShrimp
Can any of the company-specific risk be diversified away by investing in both GM and NaturalShrimp 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 NaturalShrimp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and NaturalShrimp, you can compare the effects of market volatilities on GM and NaturalShrimp 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 NaturalShrimp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and NaturalShrimp.
Diversification Opportunities for GM and NaturalShrimp
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between GM and NaturalShrimp is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and NaturalShrimp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NaturalShrimp 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 NaturalShrimp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NaturalShrimp has no effect on the direction of GM i.e., GM and NaturalShrimp go up and down completely randomly.
Pair Corralation between GM and NaturalShrimp
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the NaturalShrimp. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 24.9 times less risky than NaturalShrimp. The stock trades about -0.13 of its potential returns per unit of risk. The NaturalShrimp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 0.32 in NaturalShrimp on November 5, 2024 and sell it today you would lose (0.30) from holding NaturalShrimp or give up 93.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. NaturalShrimp
Performance |
| Timeline |
| General Motors |
| NaturalShrimp |
GM and NaturalShrimp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and NaturalShrimp
The main advantage of trading using opposite GM and NaturalShrimp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, NaturalShrimp 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 NaturalShrimp will offset losses from the drop in NaturalShrimp's long position.The idea behind General Motors and NaturalShrimp 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.| NaturalShrimp vs. AgriFORCE Growing Systems | NaturalShrimp vs. Atlantic Sapphire ASA | NaturalShrimp vs. Village Farms International | NaturalShrimp vs. Australian Agricultural |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |