Correlation Between GM and Anixa Biosciences

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

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

Diversification Opportunities for GM and Anixa Biosciences

0.14

Correlation Coefficient

GM  Anixa Biosciences

Average diversification

The 3 months correlation between GM and Anixa is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Anixa Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anixa Biosciences 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 Anixa Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anixa Biosciences has no effect on the direction of GM i.e., GM and Anixa Biosciences go up and down completely randomly.

Pair Corralation between GM and Anixa Biosciences

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.6 times more return on investment than Anixa Biosciences. However, General Motors is 1.68 times less risky than Anixa Biosciences. It trades about 0.1 of its potential returns per unit of risk. Anixa Biosciences is currently generating about 0.03 per unit of risk. If you would invest  4,829  in General Motors on September 1, 2024 and sell it today you would earn a total of  730.00  from holding General Motors or generate 15.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

General Motors  vs.  Anixa Biosciences

General Motors

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 7 (%) 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.

Anixa Biosciences

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Anixa Biosciences are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady forward indicators, Anixa Biosciences may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with GM and Anixa Biosciences

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

The idea behind General Motors and Anixa Biosciences 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.

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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.