Correlation Between GM and TELLUSGRUPPEN
Can any of the company-specific risk be diversified away by investing in both GM and TELLUSGRUPPEN 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 TELLUSGRUPPEN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and TELLUSGRUPPEN AB, you can compare the effects of market volatilities on GM and TELLUSGRUPPEN 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 TELLUSGRUPPEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and TELLUSGRUPPEN.
Diversification Opportunities for GM and TELLUSGRUPPEN
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and TELLUSGRUPPEN is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and TELLUSGRUPPEN AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TELLUSGRUPPEN AB 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 TELLUSGRUPPEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TELLUSGRUPPEN AB has no effect on the direction of GM i.e., GM and TELLUSGRUPPEN go up and down completely randomly.
Pair Corralation between GM and TELLUSGRUPPEN
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.62 times more return on investment than TELLUSGRUPPEN. However, General Motors is 1.61 times less risky than TELLUSGRUPPEN. It trades about 0.06 of its potential returns per unit of risk. TELLUSGRUPPEN AB is currently generating about -0.01 per unit of risk. If you would invest 3,673 in General Motors on September 12, 2024 and sell it today you would earn a total of 1,601 from holding General Motors or generate 43.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.9% |
| Values | Daily Returns |
General Motors vs. TELLUSGRUPPEN AB
Performance |
| Timeline |
| General Motors |
| TELLUSGRUPPEN AB |
GM and TELLUSGRUPPEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and TELLUSGRUPPEN
The main advantage of trading using opposite GM and TELLUSGRUPPEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, TELLUSGRUPPEN 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 TELLUSGRUPPEN will offset losses from the drop in TELLUSGRUPPEN's long position.The idea behind General Motors and TELLUSGRUPPEN AB 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.| TELLUSGRUPPEN vs. MI Homes | TELLUSGRUPPEN vs. Corporate Office Properties | TELLUSGRUPPEN vs. Autohome ADR | TELLUSGRUPPEN vs. Aedas Homes SA |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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