Correlation Between GM and Hellenic Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both GM and Hellenic Telecommunicatio 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 Hellenic Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Hellenic Telecommunications Organization, you can compare the effects of market volatilities on GM and Hellenic Telecommunicatio 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 Hellenic Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Hellenic Telecommunicatio.
Diversification Opportunities for GM and Hellenic Telecommunicatio
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Hellenic is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Hellenic Telecommunications Or in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hellenic Telecommunicatio 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 Hellenic Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hellenic Telecommunicatio has no effect on the direction of GM i.e., GM and Hellenic Telecommunicatio go up and down completely randomly.
Pair Corralation between GM and Hellenic Telecommunicatio
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.45 times more return on investment than Hellenic Telecommunicatio. However, GM is 1.45 times more volatile than Hellenic Telecommunications Organization. It trades about 0.05 of its potential returns per unit of risk. Hellenic Telecommunications Organization is currently generating about 0.02 per unit of risk. If you would invest 3,807 in General Motors on August 24, 2024 and sell it today you would earn a total of 2,046 from holding General Motors or generate 53.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.99% |
| Values | Daily Returns |
General Motors vs. Hellenic Telecommunications Or
Performance |
| Timeline |
| General Motors |
| Hellenic Telecommunicatio |
GM and Hellenic Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Hellenic Telecommunicatio
The main advantage of trading using opposite GM and Hellenic Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Hellenic Telecommunicatio 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 Hellenic Telecommunicatio will offset losses from the drop in Hellenic Telecommunicatio's long position.The idea behind General Motors and Hellenic Telecommunications Organization 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.| Hellenic Telecommunicatio vs. Greek Organization of | Hellenic Telecommunicatio vs. Mytilineos SA | Hellenic Telecommunicatio vs. Public Power | Hellenic Telecommunicatio vs. Motor Oil Corinth |
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.
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