Correlation Between GM and Vu Dang
Can any of the company-specific risk be diversified away by investing in both GM and Vu Dang 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 Vu Dang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Vu Dang Investment, you can compare the effects of market volatilities on GM and Vu Dang 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 Vu Dang. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Vu Dang.
Diversification Opportunities for GM and Vu Dang
Good diversification
The 3 months correlation between GM and SVD is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Vu Dang Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vu Dang Investment 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 Vu Dang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vu Dang Investment has no effect on the direction of GM i.e., GM and Vu Dang go up and down completely randomly.
Pair Corralation between GM and Vu Dang
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Vu Dang. In addition to that, GM is 1.21 times more volatile than Vu Dang Investment. It trades about -0.11 of its total potential returns per unit of risk. Vu Dang Investment is currently generating about -0.03 per unit of volatility. If you would invest 326,000 in Vu Dang Investment on October 31, 2024 and sell it today you would lose (7,000) from holding Vu Dang Investment or give up 2.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Vu Dang Investment
Performance |
| Timeline |
| General Motors |
| Vu Dang Investment |
GM and Vu Dang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Vu Dang
The main advantage of trading using opposite GM and Vu Dang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Vu Dang 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 Vu Dang will offset losses from the drop in Vu Dang's long position.The idea behind General Motors and Vu Dang Investment 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.| Vu Dang vs. Saigon Telecommunication Technologies | Vu Dang vs. BaoMinh Insurance Corp | Vu Dang vs. VTC Telecommunications JSC | Vu Dang vs. Post and Telecommunications |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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