Correlation Between GM and Clavister Holding
Can any of the company-specific risk be diversified away by investing in both GM and Clavister Holding 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 Clavister Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Clavister Holding AB, you can compare the effects of market volatilities on GM and Clavister Holding 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 Clavister Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Clavister Holding.
Diversification Opportunities for GM and Clavister Holding
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between GM and Clavister is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Clavister Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clavister Holding 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 Clavister Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clavister Holding has no effect on the direction of GM i.e., GM and Clavister Holding go up and down completely randomly.
Pair Corralation between GM and Clavister Holding
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.36 times more return on investment than Clavister Holding. However, General Motors is 2.79 times less risky than Clavister Holding. It trades about 0.14 of its potential returns per unit of risk. Clavister Holding AB is currently generating about 0.02 per unit of risk. If you would invest 3,126 in General Motors on August 25, 2024 and sell it today you would earn a total of 2,727 from holding General Motors or generate 87.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Clavister Holding AB
Performance |
| Timeline |
| General Motors |
| Clavister Holding |
GM and Clavister Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Clavister Holding
The main advantage of trading using opposite GM and Clavister Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Clavister Holding 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 Clavister Holding will offset losses from the drop in Clavister Holding's long position.The idea behind General Motors and Clavister Holding 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.| Clavister Holding vs. BIMobject AB | Clavister Holding vs. Advenica AB | Clavister Holding vs. Crunchfish AB | Clavister Holding vs. Nexam Chemical Holding |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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