Correlation Between GM and Plasson Indus
Can any of the company-specific risk be diversified away by investing in both GM and Plasson Indus 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 Plasson Indus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Plasson Indus, you can compare the effects of market volatilities on GM and Plasson Indus 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 Plasson Indus. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Plasson Indus.
Diversification Opportunities for GM and Plasson Indus
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Plasson is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Plasson Indus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plasson Indus 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 Plasson Indus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plasson Indus has no effect on the direction of GM i.e., GM and Plasson Indus go up and down completely randomly.
Pair Corralation between GM and Plasson Indus
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.66 times more return on investment than Plasson Indus. However, General Motors is 1.51 times less risky than Plasson Indus. It trades about 0.16 of its potential returns per unit of risk. Plasson Indus is currently generating about 0.02 per unit of risk. If you would invest 4,082 in General Motors on January 17, 2024 and sell it today you would earn a total of 187.00 from holding General Motors or generate 4.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
General Motors vs. Plasson Indus
Performance |
| Timeline |
| General Motors |
| Plasson Indus |
GM and Plasson Indus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Plasson Indus
The main advantage of trading using opposite GM and Plasson Indus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Plasson Indus 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 Plasson Indus will offset losses from the drop in Plasson Indus' long position.| GM vs. Hycroft Mining Holding | GM vs. Exela Technologies | GM vs. Aquagold International | GM vs. Thrivent High Yield |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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