Correlation Between GM and In Win

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

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

Diversification Opportunities for GM and In Win

-0.17

Correlation Coefficient

GM  In Win

Good diversification

The 3 months correlation between GM and 6117 is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and In Win Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on In Win Development 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 In Win. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of In Win Development has no effect on the direction of GM i.e., GM and In Win go up and down completely randomly.

Pair Corralation between GM and In Win

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the In Win. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 1.21 times less risky than In Win. The stock trades about -0.16 of its potential returns per unit of risk. The In Win Development is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9,020  in In Win Development on September 18, 2024 and sell it today you would earn a total of  230.00  from holding In Win Development or generate 2.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

General Motors  vs.  In Win Development

General Motors

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in January 2025.

In Win Development

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in In Win Development are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, In Win is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with GM and In Win

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

The idea behind General Motors and In Win Development 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.