Correlation Between GM and Shriram Finance
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By analyzing existing cross correlation between General Motors and Shriram Finance Limited, you can compare the effects of market volatilities on GM and Shriram Finance 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 Shriram Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Shriram Finance.
Diversification Opportunities for GM and Shriram Finance
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Shriram is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Shriram Finance Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shriram Finance 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 Shriram Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shriram Finance has no effect on the direction of GM i.e., GM and Shriram Finance go up and down completely randomly.
Pair Corralation between GM and Shriram Finance
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.61 times more return on investment than Shriram Finance. However, GM is 1.61 times more volatile than Shriram Finance Limited. It trades about 0.17 of its potential returns per unit of risk. Shriram Finance Limited is currently generating about -0.1 per unit of risk. If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Shriram Finance Limited
Performance |
| Timeline |
| General Motors |
| Shriram Finance |
GM and Shriram Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Shriram Finance
The main advantage of trading using opposite GM and Shriram Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Shriram Finance 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 Shriram Finance will offset losses from the drop in Shriram Finance's long position.The idea behind General Motors and Shriram Finance Limited 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.| Shriram Finance vs. Paramount Communications Limited | Shriram Finance vs. Rajnandini Metal Limited | Shriram Finance vs. Metalyst Forgings Limited | Shriram Finance vs. Garware Hi Tech Films |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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