Correlation Between GM and Altri SGPS
Can any of the company-specific risk be diversified away by investing in both GM and Altri SGPS 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 Altri SGPS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Altri SGPS SA, you can compare the effects of market volatilities on GM and Altri SGPS 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 Altri SGPS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Altri SGPS.
Diversification Opportunities for GM and Altri SGPS
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and Altri is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Altri SGPS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altri SGPS 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 Altri SGPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altri SGPS SA has no effect on the direction of GM i.e., GM and Altri SGPS go up and down completely randomly.
Pair Corralation between GM and Altri SGPS
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.5 times more return on investment than Altri SGPS. However, GM is 1.5 times more volatile than Altri SGPS SA. It trades about 0.11 of its potential returns per unit of risk. Altri SGPS SA is currently generating about 0.06 per unit of risk. If you would invest 3,212 in General Motors on August 25, 2024 and sell it today you would earn a total of 2,641 from holding General Motors or generate 82.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.64% |
| Values | Daily Returns |
General Motors vs. Altri SGPS SA
Performance |
| Timeline |
| General Motors |
| Altri SGPS SA |
GM and Altri SGPS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Altri SGPS
The main advantage of trading using opposite GM and Altri SGPS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Altri SGPS 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 Altri SGPS will offset losses from the drop in Altri SGPS's long position.The idea behind General Motors and Altri SGPS 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.| Altri SGPS vs. The Navigator | Altri SGPS vs. Sonae SGPS SA | Altri SGPS vs. NOS SGPS SA | Altri SGPS vs. Galp Energia SGPS |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |