Correlation Between GM and DATA MODUL
Can any of the company-specific risk be diversified away by investing in both GM and DATA MODUL 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 DATA MODUL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and DATA MODUL , you can compare the effects of market volatilities on GM and DATA MODUL 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 DATA MODUL. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and DATA MODUL.
Diversification Opportunities for GM and DATA MODUL
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and DATA is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and DATA MODUL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATA MODUL 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 DATA MODUL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATA MODUL has no effect on the direction of GM i.e., GM and DATA MODUL go up and down completely randomly.
Pair Corralation between GM and DATA MODUL
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.12 times more return on investment than DATA MODUL. However, GM is 1.12 times more volatile than DATA MODUL . It trades about 0.04 of its potential returns per unit of risk. DATA MODUL is currently generating about -0.07 per unit of risk. If you would invest 5,195 in General Motors on October 25, 2024 and sell it today you would earn a total of 194.00 from holding General Motors or generate 3.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. DATA MODUL
Performance |
| Timeline |
| General Motors |
| DATA MODUL |
GM and DATA MODUL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and DATA MODUL
The main advantage of trading using opposite GM and DATA MODUL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, DATA MODUL 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 DATA MODUL will offset losses from the drop in DATA MODUL's long position.The idea behind General Motors and DATA MODUL 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.| DATA MODUL vs. MHP Hotel AG | DATA MODUL vs. BJs Restaurants | DATA MODUL vs. ScanSource | DATA MODUL vs. SCANSOURCE |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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