Correlation Between GM and YH Dimri
Can any of the company-specific risk be diversified away by investing in both GM and YH Dimri 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 YH Dimri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and YH Dimri Construction, you can compare the effects of market volatilities on GM and YH Dimri 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 YH Dimri. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and YH Dimri.
Diversification Opportunities for GM and YH Dimri
Very poor diversification
The 3 months correlation between GM and DIMRI is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and YH Dimri Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YH Dimri Construction 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 YH Dimri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YH Dimri Construction has no effect on the direction of GM i.e., GM and YH Dimri go up and down completely randomly.
Pair Corralation between GM and YH Dimri
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.76 times more return on investment than YH Dimri. However, General Motors is 1.32 times less risky than YH Dimri. It trades about -0.03 of its potential returns per unit of risk. YH Dimri Construction is currently generating about -0.12 per unit of risk. If you would invest 4,285 in General Motors on January 20, 2024 and sell it today you would lose (41.00) from holding General Motors or give up 0.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 86.36% |
| Values | Daily Returns |
General Motors vs. YH Dimri Construction
Performance |
| Timeline |
| General Motors |
| YH Dimri Construction |
GM and YH Dimri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and YH Dimri
The main advantage of trading using opposite GM and YH Dimri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, YH Dimri 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 YH Dimri will offset losses from the drop in YH Dimri's long position.The idea behind General Motors and YH Dimri Construction 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.| YH Dimri vs. Migdal Insurance | YH Dimri vs. The Phoenix Holdings | YH Dimri vs. Harel Insurance Investments | YH Dimri vs. Clal Insurance Enterprises |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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