Correlation Between GM and Hiron Trade
Can any of the company-specific risk be diversified away by investing in both GM and Hiron Trade 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 Hiron Trade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Hiron Trade Investments Industrial, you can compare the effects of market volatilities on GM and Hiron Trade 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 Hiron Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Hiron Trade.
Diversification Opportunities for GM and Hiron Trade
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Hiron is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Hiron Trade Investments Indust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hiron Trade Investments 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 Hiron Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hiron Trade Investments has no effect on the direction of GM i.e., GM and Hiron Trade go up and down completely randomly.
Pair Corralation between GM and Hiron Trade
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.02 times more return on investment than Hiron Trade. However, GM is 1.02 times more volatile than Hiron Trade Investments Industrial. It trades about 0.12 of its potential returns per unit of risk. Hiron Trade Investments Industrial is currently generating about -0.02 per unit of risk. If you would invest 4,355 in General Motors on January 25, 2024 and sell it today you would earn a total of 166.00 from holding General Motors or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 77.27% |
| Values | Daily Returns |
General Motors vs. Hiron Trade Investments Indust
Performance |
| Timeline |
| General Motors |
| Hiron Trade Investments |
GM and Hiron Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Hiron Trade
The main advantage of trading using opposite GM and Hiron Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Hiron Trade 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 Hiron Trade will offset losses from the drop in Hiron Trade's long position.The idea behind General Motors and Hiron Trade Investments Industrial 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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