Correlation Between GM and Uni President
Can any of the company-specific risk be diversified away by investing in both GM and Uni President 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 Uni President into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Uni President China Holdings, you can compare the effects of market volatilities on GM and Uni President 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 Uni President. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Uni President.
Diversification Opportunities for GM and Uni President
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between GM and Uni is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Uni President China Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uni President China 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 Uni President. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uni President China has no effect on the direction of GM i.e., GM and Uni President go up and down completely randomly.
Pair Corralation between GM and Uni President
Allowing for the 90-day total investment horizon GM is expected to generate 4.38 times less return on investment than Uni President. But when comparing it to its historical volatility, General Motors is 4.65 times less risky than Uni President. It trades about 0.05 of its potential returns per unit of risk. Uni President China Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 46.00 in Uni President China Holdings on September 3, 2024 and sell it today you would earn a total of 28.00 from holding Uni President China Holdings or generate 60.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.02% |
| Values | Daily Returns |
General Motors vs. Uni President China Holdings
Performance |
| Timeline |
| General Motors |
| Uni President China |
GM and Uni President Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Uni President
The main advantage of trading using opposite GM and Uni President positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Uni President 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 Uni President will offset losses from the drop in Uni President's long position.The idea behind General Motors and Uni President China Holdings 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.| Uni President vs. Compugroup Medical SE | Uni President vs. Wayside Technology Group | Uni President vs. X FAB Silicon Foundries | Uni President vs. Microbot Medical |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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