Correlation Between GM and KODEX K
Can any of the company-specific risk be diversified away by investing in both GM and KODEX K 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 KODEX K into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and KODEX K Robot Active, you can compare the effects of market volatilities on GM and KODEX K 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 KODEX K. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and KODEX K.
Diversification Opportunities for GM and KODEX K
Very good diversification
The 3 months correlation between GM and KODEX is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and KODEX K Robot Active in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KODEX K Robot 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 KODEX K. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KODEX K Robot has no effect on the direction of GM i.e., GM and KODEX K go up and down completely randomly.
Pair Corralation between GM and KODEX K
Allowing for the 90-day total investment horizon GM is expected to generate 1.1 times less return on investment than KODEX K. In addition to that, GM is 1.29 times more volatile than KODEX K Robot Active. It trades about 0.03 of its total potential returns per unit of risk. KODEX K Robot Active is currently generating about 0.04 per unit of volatility. If you would invest 1,163,117 in KODEX K Robot Active on November 5, 2024 and sell it today you would earn a total of 310,383 from holding KODEX K Robot Active or generate 26.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.96% |
| Values | Daily Returns |
General Motors vs. KODEX K Robot Active
Performance |
| Timeline |
| General Motors |
| KODEX K Robot |
GM and KODEX K Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and KODEX K
The main advantage of trading using opposite GM and KODEX K positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, KODEX K 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 KODEX K will offset losses from the drop in KODEX K's long position.The idea behind General Motors and KODEX K Robot Active 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.| KODEX K vs. KODEX 200LONGKOSDAQ150SHORT Futures | KODEX K vs. KODEX K Renewable Energy | KODEX K vs. KODEX SP500TR | KODEX K vs. KODEX Metaverse Nasdaq |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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