Correlation Between GM and Yakult Honsha
Can any of the company-specific risk be diversified away by investing in both GM and Yakult Honsha 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 Yakult Honsha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Yakult Honsha CoLtd, you can compare the effects of market volatilities on GM and Yakult Honsha 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 Yakult Honsha. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Yakult Honsha.
Diversification Opportunities for GM and Yakult Honsha
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Yakult is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Yakult Honsha CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yakult Honsha CoLtd 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 Yakult Honsha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yakult Honsha CoLtd has no effect on the direction of GM i.e., GM and Yakult Honsha go up and down completely randomly.
Pair Corralation between GM and Yakult Honsha
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.44 times more return on investment than Yakult Honsha. However, GM is 1.44 times more volatile than Yakult Honsha CoLtd. It trades about 0.1 of its potential returns per unit of risk. Yakult Honsha CoLtd is currently generating about 0.01 per unit of risk. If you would invest 4,829 in General Motors on September 2, 2024 and sell it today you would earn a total of 730.00 from holding General Motors or generate 15.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.97% |
| Values | Daily Returns |
General Motors vs. Yakult Honsha CoLtd
Performance |
| Timeline |
| General Motors |
| Yakult Honsha CoLtd |
GM and Yakult Honsha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Yakult Honsha
The main advantage of trading using opposite GM and Yakult Honsha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Yakult Honsha 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 Yakult Honsha will offset losses from the drop in Yakult Honsha's long position.The idea behind General Motors and Yakult Honsha CoLtd 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.| Yakult Honsha vs. National Health Investors | Yakult Honsha vs. Austevoll Seafood ASA | Yakult Honsha vs. Bumrungrad Hospital Public | Yakult Honsha vs. EHEALTH |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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