Correlation Between GM and Genesyslogic
Can any of the company-specific risk be diversified away by investing in both GM and Genesyslogic 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 Genesyslogic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Genesyslogic, you can compare the effects of market volatilities on GM and Genesyslogic 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 Genesyslogic. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Genesyslogic.
Diversification Opportunities for GM and Genesyslogic
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GM and Genesyslogic is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Genesyslogic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesyslogic 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 Genesyslogic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesyslogic has no effect on the direction of GM i.e., GM and Genesyslogic go up and down completely randomly.
Pair Corralation between GM and Genesyslogic
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Genesyslogic. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 1.83 times less risky than Genesyslogic. The stock trades about -0.15 of its potential returns per unit of risk. The Genesyslogic is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 14,200 in Genesyslogic on September 13, 2024 and sell it today you would earn a total of 2,950 from holding Genesyslogic or generate 20.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
General Motors vs. Genesyslogic
Performance |
| Timeline |
| General Motors |
| Genesyslogic |
GM and Genesyslogic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Genesyslogic
The main advantage of trading using opposite GM and Genesyslogic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Genesyslogic 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 Genesyslogic will offset losses from the drop in Genesyslogic's long position.The idea behind General Motors and Genesyslogic 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.| Genesyslogic vs. Realtek Semiconductor Corp | Genesyslogic vs. Kinsus Interconnect Technology | Genesyslogic vs. Faraday Technology Corp | Genesyslogic vs. Etron Technology |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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