Correlation Between GM and Xiangtan Electrochemical
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By analyzing existing cross correlation between General Motors and Xiangtan Electrochemical Scientific, you can compare the effects of market volatilities on GM and Xiangtan Electrochemical 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 Xiangtan Electrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Xiangtan Electrochemical.
Diversification Opportunities for GM and Xiangtan Electrochemical
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Xiangtan is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Xiangtan Electrochemical Scien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiangtan Electrochemical 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 Xiangtan Electrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiangtan Electrochemical has no effect on the direction of GM i.e., GM and Xiangtan Electrochemical go up and down completely randomly.
Pair Corralation between GM and Xiangtan Electrochemical
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Xiangtan Electrochemical. In addition to that, GM is 1.43 times more volatile than Xiangtan Electrochemical Scientific. It trades about -0.06 of its total potential returns per unit of risk. Xiangtan Electrochemical Scientific is currently generating about 0.04 per unit of volatility. If you would invest 1,040 in Xiangtan Electrochemical Scientific on December 29, 2024 and sell it today you would earn a total of 34.00 from holding Xiangtan Electrochemical Scientific or generate 3.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 95.08% |
Values | Daily Returns |
General Motors vs. Xiangtan Electrochemical Scien
Performance |
Timeline |
General Motors |
Xiangtan Electrochemical |
GM and Xiangtan Electrochemical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and Xiangtan Electrochemical
The main advantage of trading using opposite GM and Xiangtan Electrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Xiangtan Electrochemical 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 Xiangtan Electrochemical will offset losses from the drop in Xiangtan Electrochemical's long position.The idea behind General Motors and Xiangtan Electrochemical Scientific 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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