Correlation Between GM and Hrvatska Postanska
Can any of the company-specific risk be diversified away by investing in both GM and Hrvatska Postanska 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 Hrvatska Postanska into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Hrvatska Postanska Banka, you can compare the effects of market volatilities on GM and Hrvatska Postanska 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 Hrvatska Postanska. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Hrvatska Postanska.
Diversification Opportunities for GM and Hrvatska Postanska
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Hrvatska is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Hrvatska Postanska Banka in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hrvatska Postanska Banka 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 Hrvatska Postanska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hrvatska Postanska Banka has no effect on the direction of GM i.e., GM and Hrvatska Postanska go up and down completely randomly.
Pair Corralation between GM and Hrvatska Postanska
Allowing for the 90-day total investment horizon GM is expected to generate 2.6 times less return on investment than Hrvatska Postanska. In addition to that, GM is 1.02 times more volatile than Hrvatska Postanska Banka. It trades about 0.06 of its total potential returns per unit of risk. Hrvatska Postanska Banka is currently generating about 0.15 per unit of volatility. If you would invest 10,545 in Hrvatska Postanska Banka on September 14, 2024 and sell it today you would earn a total of 23,855 from holding Hrvatska Postanska Banka or generate 226.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 83.84% |
| Values | Daily Returns |
General Motors vs. Hrvatska Postanska Banka
Performance |
| Timeline |
| General Motors |
| Hrvatska Postanska Banka |
GM and Hrvatska Postanska Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Hrvatska Postanska
The main advantage of trading using opposite GM and Hrvatska Postanska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Hrvatska Postanska 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 Hrvatska Postanska will offset losses from the drop in Hrvatska Postanska's long position.The idea behind General Motors and Hrvatska Postanska Banka 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.| Hrvatska Postanska vs. Zagrebacka Banka dd | Hrvatska Postanska vs. AD Plastik dd | Hrvatska Postanska vs. Dalekovod dd | Hrvatska Postanska vs. Podravka Prehrambena Industrija |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |