Correlation Between GM and Jiangsu Apon

Can any of the company-specific risk be diversified away by investing in both GM and Jiangsu Apon 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 Jiangsu Apon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between General Motors and Jiangsu Apon Medical, you can compare the effects of market volatilities on GM and Jiangsu Apon 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 Jiangsu Apon. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Jiangsu Apon.

Diversification Opportunities for GM and Jiangsu Apon

-0.33

Correlation Coefficient

GM  Jiangsu Apon

Very good diversification

The 3 months correlation between GM and Jiangsu is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Jiangsu Apon Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Apon Medical 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 Jiangsu Apon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Apon Medical has no effect on the direction of GM i.e., GM and Jiangsu Apon go up and down completely randomly.

Pair Corralation between GM and Jiangsu Apon

Allowing for the 90-day total investment horizon GM is expected to generate 1.74 times less return on investment than Jiangsu Apon. But when comparing it to its historical volatility, General Motors is 2.01 times less risky than Jiangsu Apon. It trades about 0.03 of its potential returns per unit of risk. Jiangsu Apon Medical is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,615  in Jiangsu Apon Medical on October 23, 2024 and sell it today you would earn a total of  337.00  from holding Jiangsu Apon Medical or generate 20.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.25%
Values	Daily Returns

General Motors  vs.  Jiangsu Apon Medical

General Motors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days General Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, GM is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Jiangsu Apon Medical

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Apon Medical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu Apon sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GM and Jiangsu Apon

The main advantage of trading using opposite GM and Jiangsu Apon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Jiangsu Apon 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 Jiangsu Apon will offset losses from the drop in Jiangsu Apon's long position.

The idea behind General Motors and Jiangsu Apon Medical 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.