Correlation Between GM and HEBA Fastighets
Can any of the company-specific risk be diversified away by investing in both GM and HEBA Fastighets 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 HEBA Fastighets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and HEBA Fastighets AB, you can compare the effects of market volatilities on GM and HEBA Fastighets 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 HEBA Fastighets. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and HEBA Fastighets.
Diversification Opportunities for GM and HEBA Fastighets
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and HEBA is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and HEBA Fastighets AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEBA Fastighets AB 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 HEBA Fastighets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEBA Fastighets AB has no effect on the direction of GM i.e., GM and HEBA Fastighets go up and down completely randomly.
Pair Corralation between GM and HEBA Fastighets
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.02 times more return on investment than HEBA Fastighets. However, GM is 1.02 times more volatile than HEBA Fastighets AB. It trades about -0.08 of its potential returns per unit of risk. HEBA Fastighets AB is currently generating about -0.09 per unit of risk. If you would invest 5,256 in General Motors on October 22, 2024 and sell it today you would lose (159.00) from holding General Motors or give up 3.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.95% |
| Values | Daily Returns |
General Motors vs. HEBA Fastighets AB
Performance |
| Timeline |
| General Motors |
| HEBA Fastighets AB |
GM and HEBA Fastighets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and HEBA Fastighets
The main advantage of trading using opposite GM and HEBA Fastighets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, HEBA Fastighets 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 HEBA Fastighets will offset losses from the drop in HEBA Fastighets' long position.The idea behind General Motors and HEBA Fastighets AB 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.| HEBA Fastighets vs. Atrium Ljungberg AB | HEBA Fastighets vs. Dios Fastigheter AB | HEBA Fastighets vs. Wihlborgs Fastigheter AB | HEBA Fastighets vs. Hufvudstaden AB |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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