Correlation Between GM and Hotel Shilla

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

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

Diversification Opportunities for GM and Hotel Shilla

-0.35

Correlation Coefficient

GM  Hotel Shilla

Very good diversification

The 3 months correlation between GM and Hotel is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Hotel Shilla Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Shilla 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 Hotel Shilla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Shilla has no effect on the direction of GM i.e., GM and Hotel Shilla go up and down completely randomly.

Pair Corralation between GM and Hotel Shilla

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Hotel Shilla. In addition to that, GM is 1.53 times more volatile than Hotel Shilla Co. It trades about -0.01 of its total potential returns per unit of risk. Hotel Shilla Co is currently generating about 0.08 per unit of volatility. If you would invest  3,020,000  in Hotel Shilla Co on December 20, 2024 and sell it today you would earn a total of  215,000  from holding Hotel Shilla Co or generate 7.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.92%
Values	Daily Returns

General Motors  vs.  Hotel Shilla Co

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 very healthy primary indicators, GM is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Hotel Shilla

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hotel Shilla Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hotel Shilla may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with GM and Hotel Shilla

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

The idea behind General Motors and Hotel Shilla Co 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.