Correlation Between GM and Interhides Public
Can any of the company-specific risk be diversified away by investing in both GM and Interhides Public 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 Interhides Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Interhides Public, you can compare the effects of market volatilities on GM and Interhides Public 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 Interhides Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Interhides Public.
Diversification Opportunities for GM and Interhides Public
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Interhides is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Interhides Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interhides Public 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 Interhides Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interhides Public has no effect on the direction of GM i.e., GM and Interhides Public go up and down completely randomly.
Pair Corralation between GM and Interhides Public
Allowing for the 90-day total investment horizon GM is expected to generate 191.25 times less return on investment than Interhides Public. But when comparing it to its historical volatility, General Motors is 31.17 times less risky than Interhides Public. It trades about 0.01 of its potential returns per unit of risk. Interhides Public is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 198.00 in Interhides Public on January 14, 2025 and sell it today you would lose (53.00) from holding Interhides Public or give up 26.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.79% |
| Values | Daily Returns |
General Motors vs. Interhides Public
Performance |
| Timeline |
| General Motors |
| Interhides Public |
GM and Interhides Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Interhides Public
The main advantage of trading using opposite GM and Interhides Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Interhides Public 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 Interhides Public will offset losses from the drop in Interhides Public's long position.The idea behind General Motors and Interhides Public 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.| Interhides Public vs. Newcity Public | Interhides Public vs. Pato Chemical Industry | Interhides Public vs. Ocean Glass Public | Interhides Public vs. Nawarat Patanakarn Public |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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