Correlation Between GM and ECC Games
Can any of the company-specific risk be diversified away by investing in both GM and ECC Games 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 ECC Games into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and ECC Games SA, you can compare the effects of market volatilities on GM and ECC Games 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 ECC Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and ECC Games.
Diversification Opportunities for GM and ECC Games
Excellent diversification
The 3 months correlation between GM and ECC is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and ECC Games SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECC Games 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 ECC Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECC Games SA has no effect on the direction of GM i.e., GM and ECC Games go up and down completely randomly.
Pair Corralation between GM and ECC Games
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.43 times more return on investment than ECC Games. However, General Motors is 2.31 times less risky than ECC Games. It trades about 0.11 of its potential returns per unit of risk. ECC Games SA is currently generating about -0.05 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 Against |
| Strength | Weak |
| Accuracy | 95.52% |
| Values | Daily Returns |
General Motors vs. ECC Games SA
Performance |
| Timeline |
| General Motors |
| ECC Games SA |
GM and ECC Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and ECC Games
The main advantage of trading using opposite GM and ECC Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, ECC Games 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 ECC Games will offset losses from the drop in ECC Games' long position.The idea behind General Motors and ECC Games 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.| ECC Games vs. Creativeforge Games SA | ECC Games vs. Asseco Business Solutions | ECC Games vs. Detalion Games SA | ECC Games vs. Asseco South Eastern |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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