Correlation Between GM and KCC Engineering
Can any of the company-specific risk be diversified away by investing in both GM and KCC Engineering 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 KCC Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and KCC Engineering Construction, you can compare the effects of market volatilities on GM and KCC Engineering 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 KCC Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and KCC Engineering.
Diversification Opportunities for GM and KCC Engineering
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and KCC is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and KCC Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCC Engineering Cons 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 KCC Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KCC Engineering Cons has no effect on the direction of GM i.e., GM and KCC Engineering go up and down completely randomly.
Pair Corralation between GM and KCC Engineering
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the KCC Engineering. In addition to that, GM is 1.57 times more volatile than KCC Engineering Construction. It trades about -0.15 of its total potential returns per unit of risk. KCC Engineering Construction is currently generating about 0.04 per unit of volatility. If you would invest 402,000 in KCC Engineering Construction on September 15, 2024 and sell it today you would earn a total of 5,000 from holding KCC Engineering Construction or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. KCC Engineering Construction
Performance |
| Timeline |
| General Motors |
| KCC Engineering Cons |
GM and KCC Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and KCC Engineering
The main advantage of trading using opposite GM and KCC Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, KCC Engineering 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 KCC Engineering will offset losses from the drop in KCC Engineering's long position.The idea behind General Motors and KCC Engineering Construction 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.| KCC Engineering vs. Korea New Network | KCC Engineering vs. Solution Advanced Technology | KCC Engineering vs. Busan Industrial Co | KCC Engineering vs. Busan Ind |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |