Correlation Between GM and HANA Micron
Can any of the company-specific risk be diversified away by investing in both GM and HANA Micron 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 HANA Micron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and HANA Micron, you can compare the effects of market volatilities on GM and HANA Micron 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 HANA Micron. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and HANA Micron.
Diversification Opportunities for GM and HANA Micron
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and HANA is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and HANA Micron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANA Micron 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 HANA Micron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANA Micron has no effect on the direction of GM i.e., GM and HANA Micron go up and down completely randomly.
Pair Corralation between GM and HANA Micron
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.06 times more return on investment than HANA Micron. However, GM is 1.06 times more volatile than HANA Micron. It trades about 0.17 of its potential returns per unit of risk. HANA Micron is currently generating about -0.26 per unit of risk. If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
General Motors vs. HANA Micron
Performance |
| Timeline |
| General Motors |
| HANA Micron |
GM and HANA Micron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and HANA Micron
The main advantage of trading using opposite GM and HANA Micron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, HANA Micron 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 HANA Micron will offset losses from the drop in HANA Micron's long position.The idea behind General Motors and HANA Micron 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.| HANA Micron vs. Shinil Electronics Co | HANA Micron vs. Miwon Chemical | HANA Micron vs. DAEDUCK ELECTRONICS CoLtd | HANA Micron vs. TK Chemical |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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