Correlation Between GM and Rajthanee Hospital
Can any of the company-specific risk be diversified away by investing in both GM and Rajthanee Hospital 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 Rajthanee Hospital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Rajthanee Hospital Public, you can compare the effects of market volatilities on GM and Rajthanee Hospital 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 Rajthanee Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Rajthanee Hospital.
Diversification Opportunities for GM and Rajthanee Hospital
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GM and Rajthanee is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Rajthanee Hospital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rajthanee Hospital Public 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 Rajthanee Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rajthanee Hospital Public has no effect on the direction of GM i.e., GM and Rajthanee Hospital go up and down completely randomly.
Pair Corralation between GM and Rajthanee Hospital
Allowing for the 90-day total investment horizon GM is expected to generate 38.97 times less return on investment than Rajthanee Hospital. But when comparing it to its historical volatility, General Motors is 39.22 times less risky than Rajthanee Hospital. It trades about 0.08 of its potential returns per unit of risk. Rajthanee Hospital Public is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,492 in Rajthanee Hospital Public on August 31, 2024 and sell it today you would lose (272.00) from holding Rajthanee Hospital Public or give up 10.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.64% |
| Values | Daily Returns |
General Motors vs. Rajthanee Hospital Public
Performance |
| Timeline |
| General Motors |
| Rajthanee Hospital Public |
GM and Rajthanee Hospital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Rajthanee Hospital
The main advantage of trading using opposite GM and Rajthanee Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Rajthanee Hospital 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 Rajthanee Hospital will offset losses from the drop in Rajthanee Hospital's long position.The idea behind General Motors and Rajthanee Hospital 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.| Rajthanee Hospital vs. AP Public | Rajthanee Hospital vs. Advanced Information Technology | Rajthanee Hospital vs. AJ Plast Public | Rajthanee Hospital vs. Berli Jucker Public |
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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