Correlation Between GM and HUA YU
Can any of the company-specific risk be diversified away by investing in both GM and HUA YU 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 HUA YU into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and HUA YU LIEN, you can compare the effects of market volatilities on GM and HUA YU 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 HUA YU. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and HUA YU.
Diversification Opportunities for GM and HUA YU
Pay attention - limited upside
The 3 months correlation between GM and HUA is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and HUA YU LIEN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUA YU LIEN 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 HUA YU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUA YU LIEN has no effect on the direction of GM i.e., GM and HUA YU go up and down completely randomly.
Pair Corralation between GM and HUA YU
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.12 times more return on investment than HUA YU. However, GM is 1.12 times more volatile than HUA YU LIEN. It trades about 0.14 of its potential returns per unit of risk. HUA YU LIEN is currently generating about -0.08 per unit of risk. If you would invest 4,591 in General Motors on September 8, 2024 and sell it today you would earn a total of 750.00 from holding General Motors or generate 16.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. HUA YU LIEN
Performance |
| Timeline |
| General Motors |
| HUA YU LIEN |
GM and HUA YU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and HUA YU
The main advantage of trading using opposite GM and HUA YU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, HUA YU 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 HUA YU will offset losses from the drop in HUA YU's long position.The idea behind General Motors and HUA YU LIEN 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.| HUA YU vs. Advancetek Enterprise Co | HUA YU vs. GTM Holdings Corp | HUA YU vs. De Licacy Industrial | HUA YU vs. Shinkong Textile 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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