Correlation Between GM and DONGKUK TED
Can any of the company-specific risk be diversified away by investing in both GM and DONGKUK TED 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 DONGKUK TED into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and DONGKUK TED METAL, you can compare the effects of market volatilities on GM and DONGKUK TED 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 DONGKUK TED. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and DONGKUK TED.
Diversification Opportunities for GM and DONGKUK TED
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and DONGKUK is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and DONGKUK TED METAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DONGKUK TED METAL 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 DONGKUK TED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DONGKUK TED METAL has no effect on the direction of GM i.e., GM and DONGKUK TED go up and down completely randomly.
Pair Corralation between GM and DONGKUK TED
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.72 times more return on investment than DONGKUK TED. However, GM is 1.72 times more volatile than DONGKUK TED METAL. It trades about 0.17 of its potential returns per unit of risk. DONGKUK TED METAL is currently generating about -0.17 per unit of risk. If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. DONGKUK TED METAL
Performance |
| Timeline |
| General Motors |
| DONGKUK TED METAL |
GM and DONGKUK TED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and DONGKUK TED
The main advantage of trading using opposite GM and DONGKUK TED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, DONGKUK TED 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 DONGKUK TED will offset losses from the drop in DONGKUK TED's long position.The idea behind General Motors and DONGKUK TED METAL 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.| DONGKUK TED vs. Youngbo Chemical Co | DONGKUK TED vs. Sangsin Energy Display | DONGKUK TED vs. LG Display Co | DONGKUK TED vs. Hannong Chemicals |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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