Correlation Between GM and Dunia Virtual
Can any of the company-specific risk be diversified away by investing in both GM and Dunia Virtual 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 Dunia Virtual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Dunia Virtual Online, you can compare the effects of market volatilities on GM and Dunia Virtual 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 Dunia Virtual. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Dunia Virtual.
Diversification Opportunities for GM and Dunia Virtual
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Dunia is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Dunia Virtual Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunia Virtual Online 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 Dunia Virtual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunia Virtual Online has no effect on the direction of GM i.e., GM and Dunia Virtual go up and down completely randomly.
Pair Corralation between GM and Dunia Virtual
Allowing for the 90-day total investment horizon GM is expected to generate 80.29 times less return on investment than Dunia Virtual. But when comparing it to its historical volatility, General Motors is 2.87 times less risky than Dunia Virtual. It trades about 0.02 of its potential returns per unit of risk. Dunia Virtual Online is currently generating about 0.53 of returns per unit of risk over similar time horizon. If you would invest 20,200 in Dunia Virtual Online on December 9, 2024 and sell it today you would earn a total of 25,600 from holding Dunia Virtual Online or generate 126.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Dunia Virtual Online
Performance |
| Timeline |
| General Motors |
| Dunia Virtual Online |
GM and Dunia Virtual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Dunia Virtual
The main advantage of trading using opposite GM and Dunia Virtual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Dunia Virtual 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 Dunia Virtual will offset losses from the drop in Dunia Virtual's long position.The idea behind General Motors and Dunia Virtual Online 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.| Dunia Virtual vs. Equity Development Investment | ||
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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