Correlation Between GM and Unicharm Corp
Can any of the company-specific risk be diversified away by investing in both GM and Unicharm Corp 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 Unicharm Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Unicharm Corp, you can compare the effects of market volatilities on GM and Unicharm Corp 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 Unicharm Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Unicharm Corp.
Diversification Opportunities for GM and Unicharm Corp
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Unicharm is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Unicharm Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unicharm Corp 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 Unicharm Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unicharm Corp has no effect on the direction of GM i.e., GM and Unicharm Corp go up and down completely randomly.
Pair Corralation between GM and Unicharm Corp
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.27 times more return on investment than Unicharm Corp. However, GM is 1.27 times more volatile than Unicharm Corp. It trades about 0.09 of its potential returns per unit of risk. Unicharm Corp is currently generating about -0.25 per unit of risk. If you would invest 4,833 in General Motors on September 4, 2024 and sell it today you would earn a total of 671.00 from holding General Motors or generate 13.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Unicharm Corp
Performance |
| Timeline |
| General Motors |
| Unicharm Corp |
GM and Unicharm Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Unicharm Corp
The main advantage of trading using opposite GM and Unicharm Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Unicharm Corp 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 Unicharm Corp will offset losses from the drop in Unicharm Corp's long position.The idea behind General Motors and Unicharm Corp 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.| Unicharm Corp vs. LOreal Co ADR | Unicharm Corp vs. Unilever PLC ADR | Unicharm Corp vs. Kimberly Clark | Unicharm Corp vs. The Clorox |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |