Correlation Between GM and Wing Yip
Can any of the company-specific risk be diversified away by investing in both GM and Wing Yip 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 Wing Yip into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Wing Yip Food, you can compare the effects of market volatilities on GM and Wing Yip 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 Wing Yip. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Wing Yip.
Diversification Opportunities for GM and Wing Yip
Poor diversification
The 3 months correlation between GM and Wing is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Wing Yip Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wing Yip Food 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 Wing Yip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wing Yip Food has no effect on the direction of GM i.e., GM and Wing Yip go up and down completely randomly.
Pair Corralation between GM and Wing Yip
Allowing for the 90-day total investment horizon GM is expected to generate 2.12 times less return on investment than Wing Yip. But when comparing it to its historical volatility, General Motors is 3.89 times less risky than Wing Yip. It trades about 0.14 of its potential returns per unit of risk. Wing Yip Food is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 199,900 in Wing Yip Food on September 3, 2024 and sell it today you would earn a total of 11,100 from holding Wing Yip Food or generate 5.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
General Motors vs. Wing Yip Food
Performance |
| Timeline |
| General Motors |
| Wing Yip Food |
GM and Wing Yip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Wing Yip
The main advantage of trading using opposite GM and Wing Yip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Wing Yip 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 Wing Yip will offset losses from the drop in Wing Yip's long position.The idea behind General Motors and Wing Yip Food 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.| Wing Yip vs. Maeil Dairies Co | Wing Yip vs. HYUNDAI FEED | Wing Yip vs. Neo Cremar Co | Wing Yip vs. Dongwoo Farm To |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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