Correlation Between GM and Robotis CoLtd
Can any of the company-specific risk be diversified away by investing in both GM and Robotis CoLtd 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 Robotis CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Robotis CoLtd, you can compare the effects of market volatilities on GM and Robotis CoLtd 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 Robotis CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Robotis CoLtd.
Diversification Opportunities for GM and Robotis CoLtd
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Robotis is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Robotis CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robotis CoLtd 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 Robotis CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robotis CoLtd has no effect on the direction of GM i.e., GM and Robotis CoLtd go up and down completely randomly.
Pair Corralation between GM and Robotis CoLtd
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.59 times more return on investment than Robotis CoLtd. However, General Motors is 1.69 times less risky than Robotis CoLtd. It trades about 0.05 of its potential returns per unit of risk. Robotis CoLtd is currently generating about 0.01 per unit of risk. If you would invest 3,749 in General Motors on August 29, 2024 and sell it today you would earn a total of 1,730 from holding General Motors or generate 46.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.37% |
| Values | Daily Returns |
General Motors vs. Robotis CoLtd
Performance |
| Timeline |
| General Motors |
| Robotis CoLtd |
GM and Robotis CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Robotis CoLtd
The main advantage of trading using opposite GM and Robotis CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Robotis CoLtd 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 Robotis CoLtd will offset losses from the drop in Robotis CoLtd's long position.The idea behind General Motors and Robotis CoLtd 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.| Robotis CoLtd vs. Daejoo Electronic Materials | Robotis CoLtd vs. Parksystems Corp | Robotis CoLtd vs. BH Co | Robotis CoLtd vs. Partron 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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