Correlation Between GM and La Kaffa
Can any of the company-specific risk be diversified away by investing in both GM and La Kaffa 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 La Kaffa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and La Kaffa International, you can compare the effects of market volatilities on GM and La Kaffa 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 La Kaffa. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and La Kaffa.
Diversification Opportunities for GM and La Kaffa
Very good diversification
The 3 months correlation between GM and 2732 is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and La Kaffa International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Kaffa International 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 La Kaffa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Kaffa International has no effect on the direction of GM i.e., GM and La Kaffa go up and down completely randomly.
Pair Corralation between GM and La Kaffa
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.14 times more return on investment than La Kaffa. However, GM is 1.14 times more volatile than La Kaffa International. It trades about 0.11 of its potential returns per unit of risk. La Kaffa International is currently generating about -0.01 per unit of risk. If you would invest 3,324 in General Motors on September 2, 2024 and sell it today you would earn a total of 2,235 from holding General Motors or generate 67.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.98% |
| Values | Daily Returns |
General Motors vs. La Kaffa International
Performance |
| Timeline |
| General Motors |
| La Kaffa International |
GM and La Kaffa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and La Kaffa
The main advantage of trading using opposite GM and La Kaffa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, La Kaffa 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 La Kaffa will offset losses from the drop in La Kaffa's long position.The idea behind General Motors and La Kaffa International 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.| La Kaffa vs. Arbor Technology | La Kaffa vs. MedFirst Healthcare Services | La Kaffa vs. Integrated Service Technology | La Kaffa vs. STL Technology 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |