Correlation Between GM and Italian Thai
Can any of the company-specific risk be diversified away by investing in both GM and Italian Thai 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 Italian Thai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Italian Thai Development Public, you can compare the effects of market volatilities on GM and Italian Thai 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 Italian Thai. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Italian Thai.
Diversification Opportunities for GM and Italian Thai
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Italian is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Italian Thai Development Publi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Italian Thai Develop 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 Italian Thai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Italian Thai Develop has no effect on the direction of GM i.e., GM and Italian Thai go up and down completely randomly.
Pair Corralation between GM and Italian Thai
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.9 times more return on investment than Italian Thai. However, General Motors is 1.11 times less risky than Italian Thai. It trades about 0.07 of its potential returns per unit of risk. Italian Thai Development Public is currently generating about -0.34 per unit of risk. If you would invest 5,273 in General Motors on August 29, 2024 and sell it today you would earn a total of 206.00 from holding General Motors or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Italian Thai Development Publi
Performance |
| Timeline |
| General Motors |
| Italian Thai Develop |
GM and Italian Thai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Italian Thai
The main advantage of trading using opposite GM and Italian Thai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Italian Thai 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 Italian Thai will offset losses from the drop in Italian Thai's long position.The idea behind General Motors and Italian Thai Development Public 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.| Italian Thai vs. Tata Steel Public | Italian Thai vs. Thaifoods Group Public | Italian Thai vs. TMT Steel Public | Italian Thai vs. The Erawan Group |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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