Correlation Between GM and Imugene
Can any of the company-specific risk be diversified away by investing in both GM and Imugene 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 Imugene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Imugene, you can compare the effects of market volatilities on GM and Imugene 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 Imugene. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Imugene.
Diversification Opportunities for GM and Imugene
Excellent diversification
The 3 months correlation between GM and Imugene is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Imugene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imugene 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 Imugene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imugene has no effect on the direction of GM i.e., GM and Imugene go up and down completely randomly.
Pair Corralation between GM and Imugene
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.62 times more return on investment than Imugene. However, General Motors is 1.62 times less risky than Imugene. It trades about 0.08 of its potential returns per unit of risk. Imugene is currently generating about -0.09 per unit of risk. If you would invest 4,551 in General Motors on September 1, 2024 and sell it today you would earn a total of 1,008 from holding General Motors or generate 22.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.92% |
| Values | Daily Returns |
General Motors vs. Imugene
Performance |
| Timeline |
| General Motors |
| Imugene |
GM and Imugene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Imugene
The main advantage of trading using opposite GM and Imugene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Imugene 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 Imugene will offset losses from the drop in Imugene's long position.The idea behind General Motors and Imugene 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.| Imugene vs. Aneka Tambang Tbk | Imugene vs. Commonwealth Bank | Imugene vs. Commonwealth Bank of | Imugene vs. Australia and New |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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