Correlation Between GM and Sumeet Industries
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By analyzing existing cross correlation between General Motors and Sumeet Industries Limited, you can compare the effects of market volatilities on GM and Sumeet Industries 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 Sumeet Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Sumeet Industries.
Diversification Opportunities for GM and Sumeet Industries
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Sumeet is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Sumeet Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumeet Industries 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 Sumeet Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumeet Industries has no effect on the direction of GM i.e., GM and Sumeet Industries go up and down completely randomly.
Pair Corralation between GM and Sumeet Industries
Allowing for the 90-day total investment horizon GM is expected to generate 71.83 times less return on investment than Sumeet Industries. But when comparing it to its historical volatility, General Motors is 53.35 times less risky than Sumeet Industries. It trades about 0.1 of its potential returns per unit of risk. Sumeet Industries Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 400.00 in Sumeet Industries Limited on September 25, 2024 and sell it today you would earn a total of 9,380 from holding Sumeet Industries Limited or generate 2345.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.41% |
Values | Daily Returns |
General Motors vs. Sumeet Industries Limited
Performance |
Timeline |
General Motors |
Sumeet Industries |
GM and Sumeet Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and Sumeet Industries
The main advantage of trading using opposite GM and Sumeet Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Sumeet Industries 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 Sumeet Industries will offset losses from the drop in Sumeet Industries' long position.The idea behind General Motors and Sumeet Industries Limited 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.Sumeet Industries vs. Reliance Industries Limited | Sumeet Industries vs. HDFC Bank Limited | Sumeet Industries vs. Kingfa Science Technology | Sumeet Industries vs. Rico Auto Industries |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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