Correlation Between GM and Sogeclair
Can any of the company-specific risk be diversified away by investing in both GM and Sogeclair 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 Sogeclair into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Sogeclair SA, you can compare the effects of market volatilities on GM and Sogeclair 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 Sogeclair. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Sogeclair.
Diversification Opportunities for GM and Sogeclair
Very good diversification
The 3 months correlation between GM and Sogeclair is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Sogeclair SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sogeclair SA 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 Sogeclair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sogeclair SA has no effect on the direction of GM i.e., GM and Sogeclair go up and down completely randomly.
Pair Corralation between GM and Sogeclair
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.02 times more return on investment than Sogeclair. However, GM is 1.02 times more volatile than Sogeclair SA. It trades about 0.03 of its potential returns per unit of risk. Sogeclair SA is currently generating about 0.01 per unit of risk. If you would invest 4,155 in General Motors on November 5, 2024 and sell it today you would earn a total of 791.00 from holding General Motors or generate 19.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.21% |
| Values | Daily Returns |
General Motors vs. Sogeclair SA
Performance |
| Timeline |
| General Motors |
| Sogeclair SA |
GM and Sogeclair Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Sogeclair
The main advantage of trading using opposite GM and Sogeclair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Sogeclair 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 Sogeclair will offset losses from the drop in Sogeclair's long position.The idea behind General Motors and Sogeclair SA 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.| Sogeclair vs. Marie Brizard Wine | Sogeclair vs. ISPD Network SA | Sogeclair vs. Fill Up Media | Sogeclair vs. STMicroelectronics NV |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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