Correlation Between GM and Vnsteel Vicasa
Can any of the company-specific risk be diversified away by investing in both GM and Vnsteel Vicasa 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 Vnsteel Vicasa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Vnsteel Vicasa JSC, you can compare the effects of market volatilities on GM and Vnsteel Vicasa 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 Vnsteel Vicasa. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Vnsteel Vicasa.
Diversification Opportunities for GM and Vnsteel Vicasa
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GM and Vnsteel is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Vnsteel Vicasa JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vnsteel Vicasa JSC 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 Vnsteel Vicasa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vnsteel Vicasa JSC has no effect on the direction of GM i.e., GM and Vnsteel Vicasa go up and down completely randomly.
Pair Corralation between GM and Vnsteel Vicasa
Allowing for the 90-day total investment horizon GM is expected to generate 1.39 times less return on investment than Vnsteel Vicasa. But when comparing it to its historical volatility, General Motors is 1.28 times less risky than Vnsteel Vicasa. It trades about 0.12 of its potential returns per unit of risk. Vnsteel Vicasa JSC is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 868,000 in Vnsteel Vicasa JSC on September 14, 2024 and sell it today you would earn a total of 892,000 from holding Vnsteel Vicasa JSC or generate 102.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 82.9% |
| Values | Daily Returns |
General Motors vs. Vnsteel Vicasa JSC
Performance |
| Timeline |
| General Motors |
| Vnsteel Vicasa JSC |
GM and Vnsteel Vicasa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Vnsteel Vicasa
The main advantage of trading using opposite GM and Vnsteel Vicasa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Vnsteel Vicasa 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 Vnsteel Vicasa will offset losses from the drop in Vnsteel Vicasa's long position.The idea behind General Motors and Vnsteel Vicasa JSC 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.| Vnsteel Vicasa vs. Transimex Transportation JSC | Vnsteel Vicasa vs. Tng Investment And | Vnsteel Vicasa vs. BaoMinh Insurance Corp | Vnsteel Vicasa vs. Nafoods Group JSC |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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