Correlation Between GM and Phuoc Hoa
Can any of the company-specific risk be diversified away by investing in both GM and Phuoc Hoa 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 Phuoc Hoa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Phuoc Hoa Rubber, you can compare the effects of market volatilities on GM and Phuoc Hoa 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 Phuoc Hoa. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Phuoc Hoa.
Diversification Opportunities for GM and Phuoc Hoa
Pay attention - limited upside
The 3 months correlation between GM and Phuoc is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Phuoc Hoa Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phuoc Hoa Rubber 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 Phuoc Hoa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phuoc Hoa Rubber has no effect on the direction of GM i.e., GM and Phuoc Hoa go up and down completely randomly.
Pair Corralation between GM and Phuoc Hoa
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.76 times more return on investment than Phuoc Hoa. However, GM is 1.76 times more volatile than Phuoc Hoa Rubber. It trades about 0.16 of its potential returns per unit of risk. Phuoc Hoa Rubber is currently generating about -0.02 per unit of risk. If you would invest 4,893 in General Motors on August 28, 2024 and sell it today you would earn a total of 1,127 from holding General Motors or generate 23.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
General Motors vs. Phuoc Hoa Rubber
Performance |
| Timeline |
| General Motors |
| Phuoc Hoa Rubber |
GM and Phuoc Hoa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Phuoc Hoa
The main advantage of trading using opposite GM and Phuoc Hoa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Phuoc Hoa 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 Phuoc Hoa will offset losses from the drop in Phuoc Hoa's long position.The idea behind General Motors and Phuoc Hoa Rubber 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.| Phuoc Hoa vs. FIT INVEST JSC | Phuoc Hoa vs. Damsan JSC | Phuoc Hoa vs. An Phat Plastic | Phuoc Hoa vs. APG Securities Joint |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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