Correlation Between GM and Duyen Hai

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

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

Diversification Opportunities for GM and Duyen Hai

0.47

Correlation Coefficient

GM  Duyen Hai

Very weak diversification

The 3 months correlation between GM and Duyen is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Duyen Hai Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duyen Hai Multi 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 Duyen Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duyen Hai Multi has no effect on the direction of GM i.e., GM and Duyen Hai go up and down completely randomly.

Pair Corralation between GM and Duyen Hai

Allowing for the 90-day total investment horizon General Motors is expected to generate 1.02 times more return on investment than Duyen Hai. However, GM is 1.02 times more volatile than Duyen Hai Multi. It trades about -0.01 of its potential returns per unit of risk. Duyen Hai Multi is currently generating about -0.02 per unit of risk. If you would invest  5,021  in General Motors on December 19, 2024 and sell it today you would lose (154.00) from holding General Motors or give up 3.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

General Motors  vs.  Duyen Hai Multi

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.

Duyen Hai Multi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Duyen Hai Multi has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Duyen Hai is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with GM and Duyen Hai

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

The idea behind General Motors and Duyen Hai Multi 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.