Correlation Between GM and Da Cin
Can any of the company-specific risk be diversified away by investing in both GM and Da Cin 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 Da Cin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Da Cin Construction Co, you can compare the effects of market volatilities on GM and Da Cin 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 Da Cin. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Da Cin.
Diversification Opportunities for GM and Da Cin
Very good diversification
The 3 months correlation between GM and 2535 is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Da Cin Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Da Cin Construction 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 Da Cin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Da Cin Construction has no effect on the direction of GM i.e., GM and Da Cin go up and down completely randomly.
Pair Corralation between GM and Da Cin
Allowing for the 90-day total investment horizon GM is expected to generate 1.22 times less return on investment than Da Cin. In addition to that, GM is 1.32 times more volatile than Da Cin Construction Co. It trades about 0.05 of its total potential returns per unit of risk. Da Cin Construction Co is currently generating about 0.08 per unit of volatility. If you would invest 2,975 in Da Cin Construction Co on September 2, 2024 and sell it today you would earn a total of 2,055 from holding Da Cin Construction Co or generate 69.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.98% |
| Values | Daily Returns |
General Motors vs. Da Cin Construction Co
Performance |
| Timeline |
| General Motors |
| Da Cin Construction |
GM and Da Cin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Da Cin
The main advantage of trading using opposite GM and Da Cin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Da Cin 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 Da Cin will offset losses from the drop in Da Cin's long position.The idea behind General Motors and Da Cin Construction Co 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.| Da Cin vs. Huaku Development Co | Da Cin vs. Highwealth Construction Corp | Da Cin vs. Kindom Construction Corp | Da Cin vs. Kedge Construction 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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