Correlation Between GM and Hotel Shilla
Can any of the company-specific risk be diversified away by investing in both GM and Hotel Shilla 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 Hotel Shilla into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Hotel Shilla Co, you can compare the effects of market volatilities on GM and Hotel Shilla 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 Hotel Shilla. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Hotel Shilla.
Diversification Opportunities for GM and Hotel Shilla
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Hotel is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Hotel Shilla Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Shilla 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 Hotel Shilla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Shilla has no effect on the direction of GM i.e., GM and Hotel Shilla go up and down completely randomly.
Pair Corralation between GM and Hotel Shilla
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Hotel Shilla. In addition to that, GM is 6.24 times more volatile than Hotel Shilla Co. It trades about -0.06 of its total potential returns per unit of risk. Hotel Shilla Co is currently generating about -0.11 per unit of volatility. If you would invest 3,025,000 in Hotel Shilla Co on November 4, 2024 and sell it today you would lose (30,000) from holding Hotel Shilla Co or give up 0.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.0% |
| Values | Daily Returns |
General Motors vs. Hotel Shilla Co
Performance |
| Timeline |
| General Motors |
| Hotel Shilla |
GM and Hotel Shilla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Hotel Shilla
The main advantage of trading using opposite GM and Hotel Shilla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Hotel Shilla 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 Hotel Shilla will offset losses from the drop in Hotel Shilla's long position.The idea behind General Motors and Hotel Shilla Co 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.| Hotel Shilla vs. Yura Tech Co | Hotel Shilla vs. Korea Air Svc | Hotel Shilla vs. CG Hi Tech | Hotel Shilla vs. RFTech Co |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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