Correlation Between GM and GH Research
Can any of the company-specific risk be diversified away by investing in both GM and GH Research 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 GH Research into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and GH Research PLC, you can compare the effects of market volatilities on GM and GH Research 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 GH Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and GH Research.
Diversification Opportunities for GM and GH Research
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and GHRS is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and GH Research PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GH Research PLC 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 GH Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GH Research PLC has no effect on the direction of GM i.e., GM and GH Research go up and down completely randomly.
Pair Corralation between GM and GH Research
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.45 times more return on investment than GH Research. However, General Motors is 2.2 times less risky than GH Research. It trades about 0.11 of its potential returns per unit of risk. GH Research PLC is currently generating about 0.03 per unit of risk. If you would invest 3,986 in General Motors on August 25, 2024 and sell it today you would earn a total of 1,867 from holding General Motors or generate 46.84% 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. GH Research PLC
Performance |
| Timeline |
| General Motors |
| GH Research PLC |
GM and GH Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and GH Research
The main advantage of trading using opposite GM and GH Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, GH Research 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 GH Research will offset losses from the drop in GH Research's long position.The idea behind General Motors and GH Research PLC 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.| GH Research vs. Molecular Partners AG | GH Research vs. MediciNova | GH Research vs. Anebulo Pharmaceuticals | GH Research vs. Champions Oncology |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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