Correlation Between GM and Kuo Toong
Can any of the company-specific risk be diversified away by investing in both GM and Kuo Toong 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 Kuo Toong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Kuo Toong International, you can compare the effects of market volatilities on GM and Kuo Toong 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 Kuo Toong. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Kuo Toong.
Diversification Opportunities for GM and Kuo Toong
Pay attention - limited upside
The 3 months correlation between GM and Kuo is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Kuo Toong International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuo Toong 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 Kuo Toong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuo Toong International has no effect on the direction of GM i.e., GM and Kuo Toong go up and down completely randomly.
Pair Corralation between GM and Kuo Toong
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Kuo Toong. In addition to that, GM is 1.53 times more volatile than Kuo Toong International. It trades about -0.16 of its total potential returns per unit of risk. Kuo Toong International is currently generating about -0.04 per unit of volatility. If you would invest 5,440 in Kuo Toong International on September 14, 2024 and sell it today you would lose (100.00) from holding Kuo Toong International or give up 1.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Kuo Toong International
Performance |
| Timeline |
| General Motors |
| Kuo Toong International |
GM and Kuo Toong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Kuo Toong
The main advantage of trading using opposite GM and Kuo Toong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Kuo Toong 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 Kuo Toong will offset losses from the drop in Kuo Toong's long position.The idea behind General Motors and Kuo Toong 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.| Kuo Toong vs. Nankang Rubber Tire | Kuo Toong vs. Rich Development Co | Kuo Toong vs. Kung Sing Engineering | Kuo Toong vs. Advanced Lithium Electrochemistry |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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