Correlation Between GM and QL Resources

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both GM and QL Resources 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 QL Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and QL Resources Bhd, you can compare the effects of market volatilities on GM and QL Resources 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 QL Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and QL Resources.

Diversification Opportunities for GM and QL Resources

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between GM and 7084 is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and QL Resources Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QL Resources Bhd 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 QL Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QL Resources Bhd has no effect on the direction of GM i.e., GM and QL Resources go up and down completely randomly.

Pair Corralation between GM and QL Resources

Allowing for the 90-day total investment horizon General Motors is expected to generate 2.87 times more return on investment than QL Resources. However, GM is 2.87 times more volatile than QL Resources Bhd. It trades about 0.12 of its potential returns per unit of risk. QL Resources Bhd is currently generating about 0.06 per unit of risk. If you would invest  4,563  in General Motors on September 25, 2024 and sell it today you would earn a total of  788.00  from holding General Motors or generate 17.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

General Motors  vs.  QL Resources Bhd

 Performance 
       Timeline  
General Motors 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.
QL Resources Bhd 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in QL Resources Bhd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, QL Resources is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

GM and QL Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GM and QL Resources

The main advantage of trading using opposite GM and QL Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, QL Resources 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 QL Resources will offset losses from the drop in QL Resources' long position.
The idea behind General Motors and QL Resources Bhd 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

Other Complementary Tools

Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum