Correlation Between GM and Schweiter Technologies
Can any of the company-specific risk be diversified away by investing in both GM and Schweiter Technologies 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 Schweiter Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Schweiter Technologies AG, you can compare the effects of market volatilities on GM and Schweiter Technologies 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 Schweiter Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Schweiter Technologies.
Diversification Opportunities for GM and Schweiter Technologies
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Schweiter is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Schweiter Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schweiter Technologies 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 Schweiter Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schweiter Technologies has no effect on the direction of GM i.e., GM and Schweiter Technologies go up and down completely randomly.
Pair Corralation between GM and Schweiter Technologies
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Schweiter Technologies. In addition to that, GM is 1.23 times more volatile than Schweiter Technologies AG. It trades about -0.32 of its total potential returns per unit of risk. Schweiter Technologies AG is currently generating about -0.01 per unit of volatility. If you would invest 46,400 in Schweiter Technologies AG on November 28, 2024 and sell it today you would lose (400.00) from holding Schweiter Technologies AG or give up 0.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Schweiter Technologies AG
Performance |
| Timeline |
| General Motors |
| Schweiter Technologies |
GM and Schweiter Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Schweiter Technologies
The main advantage of trading using opposite GM and Schweiter Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Schweiter Technologies 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 Schweiter Technologies will offset losses from the drop in Schweiter Technologies' long position.The idea behind General Motors and Schweiter Technologies AG 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.| Schweiter Technologies vs. Naked Wines plc | Schweiter Technologies vs. Synthomer plc | Schweiter Technologies vs. Zegona Communications Plc | Schweiter Technologies vs. Bigblu Broadband PLC |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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