Correlation Between GM and Hanjinkal
Can any of the company-specific risk be diversified away by investing in both GM and Hanjinkal 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 Hanjinkal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Hanjinkal, you can compare the effects of market volatilities on GM and Hanjinkal 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 Hanjinkal. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Hanjinkal.
Diversification Opportunities for GM and Hanjinkal
Average diversification
The 3 months correlation between GM and Hanjinkal is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Hanjinkal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjinkal 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 Hanjinkal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanjinkal has no effect on the direction of GM i.e., GM and Hanjinkal go up and down completely randomly.
Pair Corralation between GM and Hanjinkal
Allowing for the 90-day total investment horizon GM is expected to generate 1.17 times less return on investment than Hanjinkal. But when comparing it to its historical volatility, General Motors is 1.37 times less risky than Hanjinkal. It trades about 0.09 of its potential returns per unit of risk. Hanjinkal is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,370,000 in Hanjinkal on August 29, 2024 and sell it today you would earn a total of 1,560,000 from holding Hanjinkal or generate 24.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.03% |
| Values | Daily Returns |
General Motors vs. Hanjinkal
Performance |
| Timeline |
| General Motors |
| Hanjinkal |
GM and Hanjinkal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Hanjinkal
The main advantage of trading using opposite GM and Hanjinkal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Hanjinkal 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 Hanjinkal will offset losses from the drop in Hanjinkal's long position.The idea behind General Motors and Hanjinkal 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.| Hanjinkal vs. Korean Drug Co | Hanjinkal vs. Shinsegae Information Communication | Hanjinkal vs. CU Medical Systems | Hanjinkal vs. Inzi Display CoLtd |
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.
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