Correlation Between GM and DAEDUCK ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both GM and DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and DAEDUCK ELECTRONICS CoLtd, you can compare the effects of market volatilities on GM and DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and DAEDUCK ELECTRONICS.
Diversification Opportunities for GM and DAEDUCK ELECTRONICS
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GM and DAEDUCK is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and DAEDUCK ELECTRONICS CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAEDUCK ELECTRONICS CoLtd 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 DAEDUCK ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAEDUCK ELECTRONICS CoLtd has no effect on the direction of GM i.e., GM and DAEDUCK ELECTRONICS go up and down completely randomly.
Pair Corralation between GM and DAEDUCK ELECTRONICS
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.28 times more return on investment than DAEDUCK ELECTRONICS. However, GM is 1.28 times more volatile than DAEDUCK ELECTRONICS CoLtd. It trades about 0.03 of its potential returns per unit of risk. DAEDUCK ELECTRONICS CoLtd is currently generating about -0.03 per unit of risk. If you would invest 4,155 in General Motors on November 5, 2024 and sell it today you would earn a total of 791.00 from holding General Motors or generate 19.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.96% |
| Values | Daily Returns |
General Motors vs. DAEDUCK ELECTRONICS CoLtd
Performance |
| Timeline |
| General Motors |
| DAEDUCK ELECTRONICS CoLtd |
GM and DAEDUCK ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and DAEDUCK ELECTRONICS
The main advantage of trading using opposite GM and DAEDUCK ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS will offset losses from the drop in DAEDUCK ELECTRONICS's long position.The idea behind General Motors and DAEDUCK ELECTRONICS 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.| DAEDUCK ELECTRONICS vs. DONGKUK TED METAL | DAEDUCK ELECTRONICS vs. Kukil Metal Co | DAEDUCK ELECTRONICS vs. Daiyang Metal Co | DAEDUCK ELECTRONICS vs. iNtRON Biotechnology |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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