Correlation Between GM and Danang Rubber
Can any of the company-specific risk be diversified away by investing in both GM and Danang Rubber 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 Danang Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Danang Rubber JSC, you can compare the effects of market volatilities on GM and Danang Rubber 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 Danang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Danang Rubber.
Diversification Opportunities for GM and Danang Rubber
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Danang is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Danang Rubber JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danang Rubber JSC 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 Danang Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danang Rubber JSC has no effect on the direction of GM i.e., GM and Danang Rubber go up and down completely randomly.
Pair Corralation between GM and Danang Rubber
Allowing for the 90-day total investment horizon GM is expected to generate 1.03 times less return on investment than Danang Rubber. In addition to that, GM is 1.11 times more volatile than Danang Rubber JSC. It trades about 0.05 of its total potential returns per unit of risk. Danang Rubber JSC is currently generating about 0.05 per unit of volatility. If you would invest 1,892,977 in Danang Rubber JSC on September 3, 2024 and sell it today you would earn a total of 962,023 from holding Danang Rubber JSC or generate 50.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.39% |
| Values | Daily Returns |
General Motors vs. Danang Rubber JSC
Performance |
| Timeline |
| General Motors |
| Danang Rubber JSC |
GM and Danang Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Danang Rubber
The main advantage of trading using opposite GM and Danang Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Danang Rubber 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 Danang Rubber will offset losses from the drop in Danang Rubber's long position.The idea behind General Motors and Danang Rubber JSC 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.| Danang Rubber vs. VTC Telecommunications JSC | Danang Rubber vs. Hochiminh City Metal | Danang Rubber vs. Hanoi Beer Alcohol | Danang Rubber vs. Truong Thanh Furniture |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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