Correlation Between GM and Yuanta Securities

Can any of the company-specific risk be diversified away by investing in both GM and Yuanta Securities 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 Yuanta Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between General Motors and Yuanta Securities Investment, you can compare the effects of market volatilities on GM and Yuanta Securities 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 Yuanta Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Yuanta Securities.

Diversification Opportunities for GM and Yuanta Securities

0.67

Correlation Coefficient

GM  Yuanta Securities

Poor diversification

The 3 months correlation between GM and Yuanta is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Yuanta Securities Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Securities 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 Yuanta Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta Securities has no effect on the direction of GM i.e., GM and Yuanta Securities go up and down completely randomly.

Pair Corralation between GM and Yuanta Securities

Allowing for the 90-day total investment horizon General Motors is expected to generate 3.62 times more return on investment than Yuanta Securities. However, GM is 3.62 times more volatile than Yuanta Securities Investment. It trades about -0.07 of its potential returns per unit of risk. Yuanta Securities Investment is currently generating about -0.3 per unit of risk. If you would invest  5,414  in General Motors on December 27, 2024 and sell it today you would lose (685.00) from holding General Motors or give up 12.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	91.8%
Values	Daily Returns

General Motors  vs.  Yuanta Securities Investment

General Motors

Risk-Adjusted Performance

Very Weak

Over the last 90 days General Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Yuanta Securities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yuanta Securities Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with GM and Yuanta Securities

The main advantage of trading using opposite GM and Yuanta Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Yuanta Securities 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 Yuanta Securities will offset losses from the drop in Yuanta Securities' long position.

The idea behind General Motors and Yuanta Securities Investment 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.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.