Correlation Between GM and Kinh Bac
Can any of the company-specific risk be diversified away by investing in both GM and Kinh Bac 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 Kinh Bac into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Kinh Bac City, you can compare the effects of market volatilities on GM and Kinh Bac 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 Kinh Bac. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Kinh Bac.
Diversification Opportunities for GM and Kinh Bac
Excellent diversification
The 3 months correlation between GM and Kinh is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Kinh Bac City in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinh Bac City 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 Kinh Bac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinh Bac City has no effect on the direction of GM i.e., GM and Kinh Bac go up and down completely randomly.
Pair Corralation between GM and Kinh Bac
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Kinh Bac. In addition to that, GM is 1.63 times more volatile than Kinh Bac City. It trades about -0.32 of its total potential returns per unit of risk. Kinh Bac City is currently generating about 0.03 per unit of volatility. If you would invest 2,940,000 in Kinh Bac City on November 28, 2024 and sell it today you would earn a total of 20,000 from holding Kinh Bac City or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 85.71% |
| Values | Daily Returns |
General Motors vs. Kinh Bac City
Performance |
| Timeline |
| General Motors |
| Kinh Bac City |
GM and Kinh Bac Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Kinh Bac
The main advantage of trading using opposite GM and Kinh Bac positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Kinh Bac 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 Kinh Bac will offset losses from the drop in Kinh Bac's long position.The idea behind General Motors and Kinh Bac City 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.| Kinh Bac vs. Vietnam Dairy Products | Kinh Bac vs. Sao Ta Foods | Kinh Bac vs. Fecon Mining JSC | Kinh Bac vs. Bich Chi Food |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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