Correlation Between GM and GSD Holding
Can any of the company-specific risk be diversified away by investing in both GM and GSD 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 GSD 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 GSD Holding AS, you can compare the effects of market volatilities on GM and GSD 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 GSD Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and GSD Holding.
Diversification Opportunities for GM and GSD Holding
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GM and GSD is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and GSD Holding AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSD Holding AS 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 GSD Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSD Holding AS has no effect on the direction of GM i.e., GM and GSD Holding go up and down completely randomly.
Pair Corralation between GM and GSD Holding
Allowing for the 90-day total investment horizon GM is expected to generate 1.23 times less return on investment than GSD Holding. In addition to that, GM is 1.31 times more volatile than GSD Holding AS. It trades about 0.25 of its total potential returns per unit of risk. GSD Holding AS is currently generating about 0.4 per unit of volatility. If you would invest 345.00 in GSD Holding AS on August 25, 2024 and sell it today you would earn a total of 46.00 from holding GSD Holding AS or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. GSD Holding AS
Performance |
| Timeline |
| General Motors |
| GSD Holding AS |
GM and GSD Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and GSD Holding
The main advantage of trading using opposite GM and GSD Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, GSD 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 GSD Holding will offset losses from the drop in GSD Holding's long position.The idea behind General Motors and GSD Holding AS 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.| GSD Holding vs. Turkiye Is Bankasi | GSD Holding vs. Turkiye Is Bankasi | GSD Holding vs. Haci Omer Sabanci | GSD Holding vs. Turkiye Garanti Bankasi |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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