Correlation Between Ayro and GM

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

Diversification Opportunities for Ayro and GM

0.75
  Correlation Coefficient

Poor diversification

The 5 months correlation between Ayro and GM is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ayro Inc and General Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Motors and Ayro 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 Ayro Inc are associated (or correlated) with GM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Motors has no effect on the direction of Ayro i.e., Ayro and GM go up and down completely randomly.

Pair Corralation between Ayro and GM

Given the investment horizon of 90 days Ayro Inc is expected to generate 2.89 times more return on investment than GM. However, Ayro is 2.89 times more volatile than General Motors. It trades about 0.01 of its potential returns per unit of risk. General Motors is currently generating about 0.03 per unit of risk. If you would invest  229.00  in Ayro Inc on February 23, 2022 and sell it today you would lose (132.00)  from holding Ayro Inc or give up 57.64% of portfolio value over 90 days.
Time Period5 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Ayro Inc  vs.  General Motors

 Performance (%) 
      Timeline 
Ayro Inc 
Ayro Performance
0 of 100
Over the last 90 days Ayro Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in June 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Ayro Price Channel

General Motors 
GM Performance
0 of 100
Over the last 90 days General Motors has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's primary indicators remain relatively steady which may send shares a bit higher in June 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

GM Price Channel

Ayro and GM Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Ayro and GM

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

General Motors

Pair trading matchups for GM

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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