Correlation Between Xpeng and GM
Can any of the company-specific risk be diversified away by investing in both Xpeng and GM 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 Xpeng and GM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xpeng Inc and General Motors, you can compare the effects of market volatilities on Xpeng and GM 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 Xpeng with a short position of GM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xpeng and GM.
Diversification Opportunities for Xpeng and GM
Very weak diversification
The 3 months correlation between Xpeng and GM is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Xpeng Inc and General Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Motors and Xpeng 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 Xpeng Inc are associated (or correlated) with GM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Motors has no effect on the direction of Xpeng i.e., Xpeng and GM go up and down completely randomly.
Pair Corralation between Xpeng and GM
Given the investment horizon of 90 days Xpeng Inc is expected to generate 2.38 times more return on investment than GM. However, Xpeng is 2.38 times more volatile than General Motors. It trades about 0.03 of its potential returns per unit of risk. General Motors is currently generating about 0.05 per unit of risk. If you would invest 1,134 in Xpeng Inc on August 26, 2024 and sell it today you would earn a total of 57.00 from holding Xpeng Inc or generate 5.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xpeng Inc vs. General Motors
Performance |
| Timeline |
| Xpeng Inc |
| General Motors |
Xpeng and GM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xpeng and GM
The main advantage of trading using opposite Xpeng and GM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xpeng position performs unexpectedly, GM 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 GM will offset losses from the drop in GM's long position.The idea behind Xpeng Inc and General Motors 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.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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |