Correlation Between GM and Fuyao Glass

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

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

Diversification Opportunities for GM and Fuyao Glass

0.0

Correlation Coefficient

GM  Fuyao Glass

Pay attention - limited upside

The 3 months correlation between GM and Fuyao is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Fuyao Glass Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuyao Glass Industry 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 Fuyao Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuyao Glass Industry has no effect on the direction of GM i.e., GM and Fuyao Glass go up and down completely randomly.

Pair Corralation between GM and Fuyao Glass

If you would invest  4,986  in General Motors on December 18, 2024 and sell it today you would lose (86.00) from holding General Motors or give up 1.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

General Motors  vs.  Fuyao Glass Industry

General Motors

Risk-Adjusted Performance

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.

Fuyao Glass Industry

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fuyao Glass Industry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Fuyao Glass is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GM and Fuyao Glass

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

The idea behind General Motors and Fuyao Glass Industry 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.