Correlation Between GM and Beijing Tong
Can any of the company-specific risk be diversified away by investing in both GM and Beijing Tong 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 Beijing Tong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Beijing Tong Ren, you can compare the effects of market volatilities on GM and Beijing Tong 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 Beijing Tong. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Beijing Tong.
Diversification Opportunities for GM and Beijing Tong
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Beijing is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Beijing Tong Ren in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Tong Ren 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 Beijing Tong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Tong Ren has no effect on the direction of GM i.e., GM and Beijing Tong go up and down completely randomly.
Pair Corralation between GM and Beijing Tong
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Beijing Tong. In addition to that, GM is 1.42 times more volatile than Beijing Tong Ren. It trades about -0.1 of its total potential returns per unit of risk. Beijing Tong Ren is currently generating about -0.01 per unit of volatility. If you would invest 97.00 in Beijing Tong Ren on October 26, 2024 and sell it today you would lose (1.00) from holding Beijing Tong Ren or give up 1.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.5% |
| Values | Daily Returns |
General Motors vs. Beijing Tong Ren
Performance |
| Timeline |
| General Motors |
| Beijing Tong Ren |
GM and Beijing Tong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Beijing Tong
The main advantage of trading using opposite GM and Beijing Tong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Beijing Tong 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 Beijing Tong will offset losses from the drop in Beijing Tong's long position.The idea behind General Motors and Beijing Tong Ren 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.| Beijing Tong vs. Universal Health Realty | Beijing Tong vs. Planet Fitness | Beijing Tong vs. NIGHTINGALE HEALTH EO | Beijing Tong vs. NEWELL RUBBERMAID |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |