Correlation Between GM and Kinea High
Can any of the company-specific risk be diversified away by investing in both GM and Kinea High 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 Kinea High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Kinea High Yield, you can compare the effects of market volatilities on GM and Kinea High 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 Kinea High. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Kinea High.
Diversification Opportunities for GM and Kinea High
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Kinea is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Kinea High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinea High Yield 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 Kinea High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinea High Yield has no effect on the direction of GM i.e., GM and Kinea High go up and down completely randomly.
Pair Corralation between GM and Kinea High
Allowing for the 90-day total investment horizon General Motors is expected to generate 3.76 times more return on investment than Kinea High. However, GM is 3.76 times more volatile than Kinea High Yield. It trades about 0.05 of its potential returns per unit of risk. Kinea High Yield is currently generating about 0.06 per unit of risk. If you would invest 3,762 in General Motors on September 3, 2024 and sell it today you would earn a total of 1,797 from holding General Motors or generate 47.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.58% |
| Values | Daily Returns |
General Motors vs. Kinea High Yield
Performance |
| Timeline |
| General Motors |
| Kinea High Yield |
GM and Kinea High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Kinea High
The main advantage of trading using opposite GM and Kinea High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Kinea High 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 Kinea High will offset losses from the drop in Kinea High's long position.The idea behind General Motors and Kinea High Yield 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.| Kinea High vs. Fundo Investimento Imobiliario | Kinea High vs. Fras le SA | Kinea High vs. Western Digital | Kinea High vs. Clave Indices De |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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