Correlation Between GM and BANK OF SUZHOU

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

Diversification Opportunities for GM and BANK OF SUZHOU

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between GM and 002966 is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and BANK OF SUZHOU CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK OF SUZHOU 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 BANK OF SUZHOU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK OF SUZHOU has no effect on the direction of GM i.e., GM and BANK OF SUZHOU go up and down completely randomly.

Pair Corralation between GM and BANK OF SUZHOU

Allowing for the 90-day total investment horizon General Motors is expected to generate 1.72 times more return on investment than BANK OF SUZHOU. However, GM is 1.72 times more volatile than BANK OF SUZHOU. It trades about 0.02 of its potential returns per unit of risk. BANK OF SUZHOU is currently generating about 0.01 per unit of risk. If you would invest  3,162  in General Motors on June 29, 2022 and sell it today you would earn a total of  372.00  from holding General Motors or generate 11.76% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy78.67%
ValuesDaily Returns

General Motors  vs.  BANK OF SUZHOU CO

 Performance (%) 
       Timeline  
General Motors 
GM Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in October 2022.

GM Price Channel

BANK OF SUZHOU 
002966 Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in BANK OF SUZHOU are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BANK OF SUZHOU may actually be approaching a critical reversion point that can send shares even higher in October 2022.

002966 Price Channel

GM and BANK OF SUZHOU Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GM and BANK OF SUZHOU

The main advantage of trading using opposite GM and BANK OF SUZHOU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, BANK OF SUZHOU 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 BANK OF SUZHOU will offset losses from the drop in BANK OF SUZHOU's long position.
GM vs. Clearwater Paper Corp
The idea behind General Motors and BANK OF SUZHOU 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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