Correlation Between GM and Binh Duong
Can any of the company-specific risk be diversified away by investing in both GM and Binh Duong 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 Binh Duong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Binh Duong Construction, you can compare the effects of market volatilities on GM and Binh Duong 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 Binh Duong. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Binh Duong.
Diversification Opportunities for GM and Binh Duong
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Binh is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Binh Duong Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binh Duong Construction 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 Binh Duong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binh Duong Construction has no effect on the direction of GM i.e., GM and Binh Duong go up and down completely randomly.
Pair Corralation between GM and Binh Duong
Allowing for the 90-day total investment horizon GM is expected to generate 1.32 times less return on investment than Binh Duong. In addition to that, GM is 2.03 times more volatile than Binh Duong Construction. It trades about 0.08 of its total potential returns per unit of risk. Binh Duong Construction is currently generating about 0.22 per unit of volatility. If you would invest 576,000 in Binh Duong Construction on August 28, 2024 and sell it today you would earn a total of 106,000 from holding Binh Duong Construction or generate 18.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
General Motors vs. Binh Duong Construction
Performance |
| Timeline |
| General Motors |
| Binh Duong Construction |
GM and Binh Duong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Binh Duong
The main advantage of trading using opposite GM and Binh Duong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Binh Duong 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 Binh Duong will offset losses from the drop in Binh Duong's long position.The idea behind General Motors and Binh Duong Construction 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.| Binh Duong vs. An Phat Plastic | Binh Duong vs. Plastic Additives JSC | Binh Duong vs. Hanoi Plastics JSC | Binh Duong vs. PVI Reinsurance 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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