Correlation Between GM and REMEDY ENTERTAINMENT
Can any of the company-specific risk be diversified away by investing in both GM and REMEDY ENTERTAINMENT 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 REMEDY ENTERTAINMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and REMEDY ENTERTAINMENT OYJ, you can compare the effects of market volatilities on GM and REMEDY ENTERTAINMENT 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 REMEDY ENTERTAINMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and REMEDY ENTERTAINMENT.
Diversification Opportunities for GM and REMEDY ENTERTAINMENT
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and REMEDY is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and REMEDY ENTERTAINMENT OYJ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REMEDY ENTERTAINMENT OYJ 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 REMEDY ENTERTAINMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REMEDY ENTERTAINMENT OYJ has no effect on the direction of GM i.e., GM and REMEDY ENTERTAINMENT go up and down completely randomly.
Pair Corralation between GM and REMEDY ENTERTAINMENT
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the REMEDY ENTERTAINMENT. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 1.0 times less risky than REMEDY ENTERTAINMENT. The stock trades about 0.0 of its potential returns per unit of risk. The REMEDY ENTERTAINMENT OYJ is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,328 in REMEDY ENTERTAINMENT OYJ on October 26, 2024 and sell it today you would earn a total of 116.00 from holding REMEDY ENTERTAINMENT OYJ or generate 8.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
General Motors vs. REMEDY ENTERTAINMENT OYJ
Performance |
| Timeline |
| General Motors |
| REMEDY ENTERTAINMENT OYJ |
GM and REMEDY ENTERTAINMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and REMEDY ENTERTAINMENT
The main advantage of trading using opposite GM and REMEDY ENTERTAINMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, REMEDY ENTERTAINMENT 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 REMEDY ENTERTAINMENT will offset losses from the drop in REMEDY ENTERTAINMENT's long position.The idea behind General Motors and REMEDY ENTERTAINMENT OYJ 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.| REMEDY ENTERTAINMENT vs. GLG LIFE TECH | REMEDY ENTERTAINMENT vs. Sunny Optical Technology | REMEDY ENTERTAINMENT vs. REVO INSURANCE SPA | REMEDY ENTERTAINMENT vs. CDN IMPERIAL 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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