Correlation Between GM and Khang Dien

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

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

Diversification Opportunities for GM and Khang Dien

-0.72

Correlation Coefficient

GM  Khang Dien

Pay attention - limited upside

The 3 months correlation between GM and Khang is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Khang Dien House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Khang Dien House 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 Khang Dien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Khang Dien House has no effect on the direction of GM i.e., GM and Khang Dien go up and down completely randomly.

Pair Corralation between GM and Khang Dien

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Khang Dien. In addition to that, GM is 3.25 times more volatile than Khang Dien House. It trades about -0.22 of its total potential returns per unit of risk. Khang Dien House is currently generating about 0.58 per unit of volatility. If you would invest  3,280,000  in Khang Dien House on September 26, 2024 and sell it today you would earn a total of  315,000  from holding Khang Dien House or generate 9.6% return on investment over 90 days.

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

General Motors  vs.  Khang Dien House

General Motors

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.

Khang Dien House

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with GM and Khang Dien

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

The idea behind General Motors and Khang Dien House 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.