Correlation Between GM and Hynion AS
Can any of the company-specific risk be diversified away by investing in both GM and Hynion AS 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 Hynion AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Hynion AS, you can compare the effects of market volatilities on GM and Hynion AS 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 Hynion AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Hynion AS.
Diversification Opportunities for GM and Hynion AS
Average diversification
The 3 months correlation between GM and Hynion is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Hynion AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hynion AS 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 Hynion AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hynion AS has no effect on the direction of GM i.e., GM and Hynion AS go up and down completely randomly.
Pair Corralation between GM and Hynion AS
Allowing for the 90-day total investment horizon GM is expected to generate 27.96 times less return on investment than Hynion AS. But when comparing it to its historical volatility, General Motors is 8.8 times less risky than Hynion AS. It trades about 0.04 of its potential returns per unit of risk. Hynion AS is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Hynion AS on October 20, 2024 and sell it today you would earn a total of 3.00 from holding Hynion AS or generate 23.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 85.0% |
| Values | Daily Returns |
General Motors vs. Hynion AS
Performance |
| Timeline |
| General Motors |
| Hynion AS |
GM and Hynion AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Hynion AS
The main advantage of trading using opposite GM and Hynion AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Hynion AS 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 Hynion AS will offset losses from the drop in Hynion AS's long position.The idea behind General Motors and Hynion AS 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.| Hynion AS vs. Nordic Mining ASA | Hynion AS vs. Grieg Seafood ASA | Hynion AS vs. Clean Seas Seafood | Hynion AS vs. Sparebanken Ost |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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