Correlation Between GM and Coretronic
Can any of the company-specific risk be diversified away by investing in both GM and Coretronic 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 Coretronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Coretronic, you can compare the effects of market volatilities on GM and Coretronic 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 Coretronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Coretronic.
Diversification Opportunities for GM and Coretronic
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Coretronic is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Coretronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coretronic 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 Coretronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coretronic has no effect on the direction of GM i.e., GM and Coretronic go up and down completely randomly.
Pair Corralation between GM and Coretronic
Allowing for the 90-day total investment horizon GM is expected to generate 1.14 times less return on investment than Coretronic. But when comparing it to its historical volatility, General Motors is 1.13 times less risky than Coretronic. It trades about 0.17 of its potential returns per unit of risk. Coretronic is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 6,930 in Coretronic on September 1, 2024 and sell it today you would earn a total of 830.00 from holding Coretronic or generate 11.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
General Motors vs. Coretronic
Performance |
| Timeline |
| General Motors |
| Coretronic |
GM and Coretronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Coretronic
The main advantage of trading using opposite GM and Coretronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Coretronic 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 Coretronic will offset losses from the drop in Coretronic's long position.The idea behind General Motors and Coretronic 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.| Coretronic vs. Qisda Corp | Coretronic vs. AU Optronics | Coretronic vs. Vanguard International Semiconductor | Coretronic vs. Lite On Technology Corp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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