Correlation Between GM and Xbrane Biopharma
Can any of the company-specific risk be diversified away by investing in both GM and Xbrane Biopharma 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 Xbrane Biopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Xbrane Biopharma AB, you can compare the effects of market volatilities on GM and Xbrane Biopharma 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 Xbrane Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Xbrane Biopharma.
Diversification Opportunities for GM and Xbrane Biopharma
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Xbrane is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Xbrane Biopharma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xbrane Biopharma 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 Xbrane Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xbrane Biopharma has no effect on the direction of GM i.e., GM and Xbrane Biopharma go up and down completely randomly.
Pair Corralation between GM and Xbrane Biopharma
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.15 times more return on investment than Xbrane Biopharma. However, General Motors is 6.62 times less risky than Xbrane Biopharma. It trades about 0.04 of its potential returns per unit of risk. Xbrane Biopharma AB is currently generating about -0.03 per unit of risk. If you would invest 3,507 in General Motors on November 27, 2024 and sell it today you would earn a total of 1,150 from holding General Motors or generate 32.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Xbrane Biopharma AB
Performance |
| Timeline |
| General Motors |
| Xbrane Biopharma |
GM and Xbrane Biopharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Xbrane Biopharma
The main advantage of trading using opposite GM and Xbrane Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Xbrane Biopharma 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 Xbrane Biopharma will offset losses from the drop in Xbrane Biopharma's long position.The idea behind General Motors and Xbrane Biopharma AB 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.| Xbrane Biopharma vs. Hansa Biopharma AB | Xbrane Biopharma vs. Vicore Pharma Holding | Xbrane Biopharma vs. XSpray Pharma AB | Xbrane Biopharma vs. Saniona AB |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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