Correlation Between GM and Delta Asia
Can any of the company-specific risk be diversified away by investing in both GM and Delta Asia 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 Delta Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Delta Asia International, you can compare the effects of market volatilities on GM and Delta Asia 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 Delta Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Delta Asia.
Diversification Opportunities for GM and Delta Asia
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Delta is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Delta Asia International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Asia International 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 Delta Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Asia International has no effect on the direction of GM i.e., GM and Delta Asia go up and down completely randomly.
Pair Corralation between GM and Delta Asia
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.01 times more return on investment than Delta Asia. However, GM is 2.01 times more volatile than Delta Asia International. It trades about 0.14 of its potential returns per unit of risk. Delta Asia International is currently generating about -0.06 per unit of risk. If you would invest 5,180 in General Motors on September 3, 2024 and sell it today you would earn a total of 379.00 from holding General Motors or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
General Motors vs. Delta Asia International
Performance |
| Timeline |
| General Motors |
| Delta Asia International |
GM and Delta Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Delta Asia
The main advantage of trading using opposite GM and Delta Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Delta Asia 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 Delta Asia will offset losses from the drop in Delta Asia's long position.The idea behind General Motors and Delta Asia International 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.| Delta Asia vs. StShine Optical Co | Delta Asia vs. Bioteque | Delta Asia vs. TTY Biopharm Co | Delta Asia vs. Apex Biotechnology 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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