Correlation Between GM and Shengkai Innovations
Can any of the company-specific risk be diversified away by investing in both GM and Shengkai Innovations 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 Shengkai Innovations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Shengkai Innovations, you can compare the effects of market volatilities on GM and Shengkai Innovations 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 Shengkai Innovations. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Shengkai Innovations.
Diversification Opportunities for GM and Shengkai Innovations
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Shengkai is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Shengkai Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shengkai Innovations 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 Shengkai Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shengkai Innovations has no effect on the direction of GM i.e., GM and Shengkai Innovations go up and down completely randomly.
Pair Corralation between GM and Shengkai Innovations
If you would invest 3,673 in General Motors on September 12, 2024 and sell it today you would earn a total of 1,601 from holding General Motors or generate 43.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.27% |
| Values | Daily Returns |
General Motors vs. Shengkai Innovations
Performance |
| Timeline |
| General Motors |
| Shengkai Innovations |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Shengkai Innovations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Shengkai Innovations
The main advantage of trading using opposite GM and Shengkai Innovations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Shengkai Innovations 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 Shengkai Innovations will offset losses from the drop in Shengkai Innovations' long position.The idea behind General Motors and Shengkai Innovations 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.| Shengkai Innovations vs. Lion One Metals | Shengkai Innovations vs. Franklin Credit Management | Shengkai Innovations vs. Harmony Gold Mining | Shengkai Innovations vs. Royalty Management Holding |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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