Correlation Between GM and Qianhe CondimentFood

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

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

Diversification Opportunities for GM and Qianhe CondimentFood

0.29

Correlation Coefficient

GM  Qianhe CondimentFood

Modest diversification

The 3 months correlation between GM and Qianhe is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Qianhe CondimentFood Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qianhe CondimentFood 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 Qianhe CondimentFood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qianhe CondimentFood has no effect on the direction of GM i.e., GM and Qianhe CondimentFood go up and down completely randomly.

Pair Corralation between GM and Qianhe CondimentFood

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.89 times more return on investment than Qianhe CondimentFood. However, General Motors is 1.12 times less risky than Qianhe CondimentFood. It trades about 0.04 of its potential returns per unit of risk. Qianhe CondimentFood Co is currently generating about -0.05 per unit of risk. If you would invest  3,545  in General Motors on October 15, 2024 and sell it today you would earn a total of  1,440  from holding General Motors or generate 40.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.37%
Values	Daily Returns

General Motors  vs.  Qianhe CondimentFood Co

General Motors

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Qianhe CondimentFood

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qianhe CondimentFood Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with GM and Qianhe CondimentFood

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

The idea behind General Motors and Qianhe CondimentFood Co 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.