Correlation Between GM and Electromagnetic Geoservices
Can any of the company-specific risk be diversified away by investing in both GM and Electromagnetic Geoservices 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 Electromagnetic Geoservices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Electromagnetic Geoservices ASA, you can compare the effects of market volatilities on GM and Electromagnetic Geoservices 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 Electromagnetic Geoservices. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Electromagnetic Geoservices.
Diversification Opportunities for GM and Electromagnetic Geoservices
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Electromagnetic is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Electromagnetic Geoservices AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromagnetic Geoservices 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 Electromagnetic Geoservices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electromagnetic Geoservices has no effect on the direction of GM i.e., GM and Electromagnetic Geoservices go up and down completely randomly.
Pair Corralation between GM and Electromagnetic Geoservices
Allowing for the 90-day total investment horizon GM is expected to generate 1.13 times less return on investment than Electromagnetic Geoservices. But when comparing it to its historical volatility, General Motors is 2.01 times less risky than Electromagnetic Geoservices. It trades about 0.06 of its potential returns per unit of risk. Electromagnetic Geoservices ASA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 160.00 in Electromagnetic Geoservices ASA on September 14, 2024 and sell it today you would earn a total of 44.00 from holding Electromagnetic Geoservices ASA or generate 27.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
General Motors vs. Electromagnetic Geoservices AS
Performance |
| Timeline |
| General Motors |
| Electromagnetic Geoservices |
GM and Electromagnetic Geoservices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Electromagnetic Geoservices
The main advantage of trading using opposite GM and Electromagnetic Geoservices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Electromagnetic Geoservices 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 Electromagnetic Geoservices will offset losses from the drop in Electromagnetic Geoservices' long position.The idea behind General Motors and Electromagnetic Geoservices ASA 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.| Electromagnetic Geoservices vs. Prosafe SE | Electromagnetic Geoservices vs. TGS NOPEC Geophysical | Electromagnetic Geoservices vs. SeaBird Exploration Plc | Electromagnetic Geoservices vs. BW Offshore |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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