Correlation Between GM and ALM Equity
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By analyzing existing cross correlation between General Motors and ALM Equity AB, you can compare the effects of market volatilities on GM and ALM Equity 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 ALM Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and ALM Equity.
Diversification Opportunities for GM and ALM Equity
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and ALM is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and ALM Equity AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALM Equity 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 ALM Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALM Equity AB has no effect on the direction of GM i.e., GM and ALM Equity go up and down completely randomly.
Pair Corralation between GM and ALM Equity
Allowing for the 90-day total investment horizon General Motors is expected to generate 4.94 times more return on investment than ALM Equity. However, GM is 4.94 times more volatile than ALM Equity AB. It trades about 0.19 of its potential returns per unit of risk. ALM Equity AB is currently generating about -0.18 per unit of risk. If you would invest 4,484 in General Motors on August 29, 2024 and sell it today you would earn a total of 995.00 from holding General Motors or generate 22.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. ALM Equity AB
Performance |
| Timeline |
| General Motors |
| ALM Equity AB |
GM and ALM Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and ALM Equity
The main advantage of trading using opposite GM and ALM Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, ALM Equity 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 ALM Equity will offset losses from the drop in ALM Equity's long position.The idea behind General Motors and ALM Equity 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.| ALM Equity vs. Hufvudstaden AB | ALM Equity vs. FastPartner AB | ALM Equity vs. KABE Group AB | ALM Equity vs. IAR Systems Group |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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