Correlation Between GM and Shinkong Insurance
Can any of the company-specific risk be diversified away by investing in both GM and Shinkong Insurance 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 Shinkong Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Shinkong Insurance Co, you can compare the effects of market volatilities on GM and Shinkong Insurance 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 Shinkong Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Shinkong Insurance.
Diversification Opportunities for GM and Shinkong Insurance
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Shinkong is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Shinkong Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinkong Insurance 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 Shinkong Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinkong Insurance has no effect on the direction of GM i.e., GM and Shinkong Insurance go up and down completely randomly.
Pair Corralation between GM and Shinkong Insurance
Allowing for the 90-day total investment horizon GM is expected to generate 1.07 times less return on investment than Shinkong Insurance. In addition to that, GM is 1.13 times more volatile than Shinkong Insurance Co. It trades about 0.09 of its total potential returns per unit of risk. Shinkong Insurance Co is currently generating about 0.11 per unit of volatility. If you would invest 7,020 in Shinkong Insurance Co on September 1, 2024 and sell it today you would earn a total of 2,980 from holding Shinkong Insurance Co or generate 42.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Shinkong Insurance Co
Performance |
| Timeline |
| General Motors |
| Shinkong Insurance |
GM and Shinkong Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Shinkong Insurance
The main advantage of trading using opposite GM and Shinkong Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Shinkong Insurance 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 Shinkong Insurance will offset losses from the drop in Shinkong Insurance's long position.The idea behind General Motors and Shinkong Insurance 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.| Shinkong Insurance vs. Central Reinsurance Corp | Shinkong Insurance vs. Huaku Development Co | Shinkong Insurance vs. Fubon Financial Holding |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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