Correlation Between GM and Amlogic Shanghai

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

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

Diversification Opportunities for GM and Amlogic Shanghai

0.44

Correlation Coefficient

GM  Amlogic Shanghai

Very weak diversification

The 3 months correlation between GM and Amlogic is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Amlogic Shanghai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amlogic Shanghai 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 Amlogic Shanghai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amlogic Shanghai has no effect on the direction of GM i.e., GM and Amlogic Shanghai go up and down completely randomly.

Pair Corralation between GM and Amlogic Shanghai

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.65 times more return on investment than Amlogic Shanghai. However, General Motors is 1.54 times less risky than Amlogic Shanghai. It trades about 0.05 of its potential returns per unit of risk. Amlogic Shanghai Co is currently generating about 0.01 per unit of risk. If you would invest  3,297  in General Motors on September 19, 2024 and sell it today you would earn a total of  1,818  from holding General Motors or generate 55.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.36%
Values	Daily Returns

General Motors  vs.  Amlogic Shanghai Co

General Motors

Risk-Adjusted Performance

3 of 100

Insignificant

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 weak primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Amlogic Shanghai

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amlogic Shanghai Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Amlogic Shanghai sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GM and Amlogic Shanghai

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

The idea behind General Motors and Amlogic Shanghai 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.