Correlation Between GM and Neo Cremar
Can any of the company-specific risk be diversified away by investing in both GM and Neo Cremar 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 Neo Cremar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Neo Cremar Co, you can compare the effects of market volatilities on GM and Neo Cremar 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 Neo Cremar. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Neo Cremar.
Diversification Opportunities for GM and Neo Cremar
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GM and Neo is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Neo Cremar Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Cremar 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 Neo Cremar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Cremar has no effect on the direction of GM i.e., GM and Neo Cremar go up and down completely randomly.
Pair Corralation between GM and Neo Cremar
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.12 times more return on investment than Neo Cremar. However, GM is 1.12 times more volatile than Neo Cremar Co. It trades about 0.09 of its potential returns per unit of risk. Neo Cremar Co is currently generating about 0.01 per unit of risk. If you would invest 4,044 in General Motors on September 1, 2024 and sell it today you would earn a total of 1,515 from holding General Motors or generate 37.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.34% |
| Values | Daily Returns |
General Motors vs. Neo Cremar Co
Performance |
| Timeline |
| General Motors |
| Neo Cremar |
GM and Neo Cremar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Neo Cremar
The main advantage of trading using opposite GM and Neo Cremar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Neo Cremar 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 Neo Cremar will offset losses from the drop in Neo Cremar's long position.The idea behind General Motors and Neo Cremar Co 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.| Neo Cremar vs. DataSolution | Neo Cremar vs. InfoBank | Neo Cremar vs. Samsung Life Insurance | Neo Cremar vs. Total Soft Bank |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Transaction History View history of all your transactions and understand their impact on performance |