Correlation Between GM and TKS Technologies
Can any of the company-specific risk be diversified away by investing in both GM and TKS Technologies 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 TKS Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and TKS Technologies Public, you can compare the effects of market volatilities on GM and TKS Technologies 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 TKS Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and TKS Technologies.
Diversification Opportunities for GM and TKS Technologies
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and TKS is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and TKS Technologies Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TKS Technologies 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 TKS Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TKS Technologies Public has no effect on the direction of GM i.e., GM and TKS Technologies go up and down completely randomly.
Pair Corralation between GM and TKS Technologies
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.77 times more return on investment than TKS Technologies. However, GM is 2.77 times more volatile than TKS Technologies Public. It trades about -0.06 of its potential returns per unit of risk. TKS Technologies Public is currently generating about -0.37 per unit of risk. If you would invest 5,177 in General Motors on November 4, 2024 and sell it today you would lose (231.00) from holding General Motors or give up 4.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
General Motors vs. TKS Technologies Public
Performance |
| Timeline |
| General Motors |
| TKS Technologies Public |
GM and TKS Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and TKS Technologies
The main advantage of trading using opposite GM and TKS Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, TKS Technologies 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 TKS Technologies will offset losses from the drop in TKS Technologies' long position.The idea behind General Motors and TKS Technologies 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.| TKS Technologies vs. Synnex Public | TKS Technologies vs. SiS Distribution Public | TKS Technologies vs. Thoresen Thai Agencies | TKS Technologies vs. SVI 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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