Correlation Between GM and KH Group
Can any of the company-specific risk be diversified away by investing in both GM and KH Group 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 KH Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and KH Group Oyj, you can compare the effects of market volatilities on GM and KH Group 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 KH Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and KH Group.
Diversification Opportunities for GM and KH Group
Average diversification
The 3 months correlation between GM and KHG is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and KH Group Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KH Group Oyj 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 KH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KH Group Oyj has no effect on the direction of GM i.e., GM and KH Group go up and down completely randomly.
Pair Corralation between GM and KH Group
Allowing for the 90-day total investment horizon GM is expected to generate 91.17 times less return on investment than KH Group. But when comparing it to its historical volatility, General Motors is 73.95 times less risky than KH Group. It trades about 0.17 of its potential returns per unit of risk. KH Group Oyj is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 58.00 in KH Group Oyj on September 1, 2024 and sell it today you would earn a total of 10,029 from holding KH Group Oyj or generate 17291.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
General Motors vs. KH Group Oyj
Performance |
| Timeline |
| General Motors |
| KH Group Oyj |
GM and KH Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and KH Group
The main advantage of trading using opposite GM and KH Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, KH Group 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 KH Group will offset losses from the drop in KH Group's long position.The idea behind General Motors and KH Group Oyj 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.| KH Group vs. Sotkamo Silver AB | KH Group vs. Reka Industrial Oyj | KH Group vs. SSH Communications Security | KH Group vs. Detection Technology OY |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |