Correlation Between GM and Thai Union
Can any of the company-specific risk be diversified away by investing in both GM and Thai Union 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 Thai Union into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Thai Union Group, you can compare the effects of market volatilities on GM and Thai Union 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 Thai Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Thai Union.
Diversification Opportunities for GM and Thai Union
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between GM and Thai is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Thai Union Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Union Group 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 Thai Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Union Group has no effect on the direction of GM i.e., GM and Thai Union go up and down completely randomly.
Pair Corralation between GM and Thai Union
Allowing for the 90-day total investment horizon General Motors is expected to generate 3.27 times more return on investment than Thai Union. However, GM is 3.27 times more volatile than Thai Union Group. It trades about 0.17 of its potential returns per unit of risk. Thai Union Group is currently generating about 0.26 per unit of risk. If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
General Motors vs. Thai Union Group
Performance |
| Timeline |
| General Motors |
| Thai Union Group |
GM and Thai Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Thai Union
The main advantage of trading using opposite GM and Thai Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Thai Union 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 Thai Union will offset losses from the drop in Thai Union's long position.The idea behind General Motors and Thai Union Group 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.| Thai Union vs. Krung Thai Bank | Thai Union vs. Thai Oil Public | Thai Union vs. Charoen Pokphand Foods | Thai Union vs. CP ALL 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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