Correlation Between GM and Socit BIC
Can any of the company-specific risk be diversified away by investing in both GM and Socit BIC 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 Socit BIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Socit BIC SA, you can compare the effects of market volatilities on GM and Socit BIC 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 Socit BIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Socit BIC.
Diversification Opportunities for GM and Socit BIC
Poor diversification
The 3 months correlation between GM and Socit is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Socit BIC SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Socit BIC 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 Socit BIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Socit BIC SA has no effect on the direction of GM i.e., GM and Socit BIC go up and down completely randomly.
Pair Corralation between GM and Socit BIC
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.42 times more return on investment than Socit BIC. However, GM is 1.42 times more volatile than Socit BIC SA. It trades about 0.05 of its potential returns per unit of risk. Socit BIC SA is currently generating about 0.02 per unit of risk. If you would invest 3,757 in General Motors on August 30, 2024 and sell it today you would earn a total of 1,793 from holding General Motors or generate 47.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.22% |
| Values | Daily Returns |
General Motors vs. Socit BIC SA
Performance |
| Timeline |
| General Motors |
| Socit BIC SA |
GM and Socit BIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Socit BIC
The main advantage of trading using opposite GM and Socit BIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Socit BIC 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 Socit BIC will offset losses from the drop in Socit BIC's long position.The idea behind General Motors and Socit BIC 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.| Socit BIC vs. Imerys SA | Socit BIC vs. Casino Guichard Perrachon | Socit BIC vs. SEB SA | Socit BIC vs. Mtropole Tlvision 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |