Correlation Between GM and Zodiac Energy
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By analyzing existing cross correlation between General Motors and Zodiac Energy Limited, you can compare the effects of market volatilities on GM and Zodiac Energy 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 Zodiac Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Zodiac Energy.
Diversification Opportunities for GM and Zodiac Energy
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Zodiac is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Zodiac Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zodiac Energy Limited 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 Zodiac Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zodiac Energy Limited has no effect on the direction of GM i.e., GM and Zodiac Energy go up and down completely randomly.
Pair Corralation between GM and Zodiac Energy
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.2 times more return on investment than Zodiac Energy. However, GM is 1.2 times more volatile than Zodiac Energy Limited. It trades about 0.16 of its potential returns per unit of risk. Zodiac Energy Limited is currently generating about -0.32 per unit of risk. If you would invest 5,096 in General Motors on September 2, 2024 and sell it today you would earn a total of 463.00 from holding General Motors or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Zodiac Energy Limited
Performance |
| Timeline |
| General Motors |
| Zodiac Energy Limited |
GM and Zodiac Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Zodiac Energy
The main advantage of trading using opposite GM and Zodiac Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Zodiac Energy 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 Zodiac Energy will offset losses from the drop in Zodiac Energy's long position.The idea behind General Motors and Zodiac Energy 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.| Zodiac Energy vs. Sukhjit Starch Chemicals | Zodiac Energy vs. Blue Coast Hotels | Zodiac Energy vs. Vishnu Chemicals Limited | Zodiac Energy vs. Chambal Fertilizers Chemicals |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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