Correlation Between GM and Withuspharmaceutical
Can any of the company-specific risk be diversified away by investing in both GM and Withuspharmaceutical 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 Withuspharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Withuspharmaceutical CoLtd, you can compare the effects of market volatilities on GM and Withuspharmaceutical 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 Withuspharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Withuspharmaceutical.
Diversification Opportunities for GM and Withuspharmaceutical
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Withuspharmaceutical is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Withuspharmaceutical CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Withuspharmaceutical 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 Withuspharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Withuspharmaceutical has no effect on the direction of GM i.e., GM and Withuspharmaceutical go up and down completely randomly.
Pair Corralation between GM and Withuspharmaceutical
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.64 times more return on investment than Withuspharmaceutical. However, General Motors is 1.56 times less risky than Withuspharmaceutical. It trades about 0.06 of its potential returns per unit of risk. Withuspharmaceutical CoLtd is currently generating about -0.01 per unit of risk. If you would invest 3,525 in General Motors on August 31, 2024 and sell it today you would earn a total of 2,034 from holding General Motors or generate 57.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.86% |
| Values | Daily Returns |
General Motors vs. Withuspharmaceutical CoLtd
Performance |
| Timeline |
| General Motors |
| Withuspharmaceutical |
GM and Withuspharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Withuspharmaceutical
The main advantage of trading using opposite GM and Withuspharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Withuspharmaceutical 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 Withuspharmaceutical will offset losses from the drop in Withuspharmaceutical's long position.The idea behind General Motors and Withuspharmaceutical CoLtd 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.| Withuspharmaceutical vs. Kolon Life Science | Withuspharmaceutical vs. JETEMA Co | Withuspharmaceutical vs. Aminologics CoLtd | Withuspharmaceutical vs. Daihan Pharmaceutical 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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