Correlation Between GM and Junee Limited
Can any of the company-specific risk be diversified away by investing in both GM and Junee Limited 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 Junee Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Junee Limited Ordinary, you can compare the effects of market volatilities on GM and Junee Limited 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 Junee Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Junee Limited.
Diversification Opportunities for GM and Junee Limited
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Junee is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Junee Limited Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Junee Limited Ordinary 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 Junee Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Junee Limited Ordinary has no effect on the direction of GM i.e., GM and Junee Limited go up and down completely randomly.
Pair Corralation between GM and Junee Limited
Allowing for the 90-day total investment horizon GM is expected to generate 1.14 times less return on investment than Junee Limited. But when comparing it to its historical volatility, General Motors is 2.29 times less risky than Junee Limited. It trades about 0.07 of its potential returns per unit of risk. Junee Limited Ordinary is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 406.00 in Junee Limited Ordinary on September 11, 2024 and sell it today you would earn a total of 34.00 from holding Junee Limited Ordinary or generate 8.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 39.71% |
Values | Daily Returns |
General Motors vs. Junee Limited Ordinary
Performance |
Timeline |
General Motors |
Junee Limited Ordinary |
GM and Junee Limited Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and Junee Limited
The main advantage of trading using opposite GM and Junee Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Junee Limited 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 Junee Limited will offset losses from the drop in Junee Limited's long position.The idea behind General Motors and Junee Limited Ordinary 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.Junee Limited vs. FT Vest Equity | Junee Limited vs. Zillow Group Class | Junee Limited vs. Northern Lights | Junee Limited vs. VanEck Vectors Moodys |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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