Correlation Between GM and Inpost SA
Can any of the company-specific risk be diversified away by investing in both GM and Inpost SA 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 Inpost SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Inpost SA, you can compare the effects of market volatilities on GM and Inpost SA 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 Inpost SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Inpost SA.
Diversification Opportunities for GM and Inpost SA
Significant diversification
The 3 months correlation between GM and Inpost is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Inpost SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inpost SA 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 Inpost SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inpost SA has no effect on the direction of GM i.e., GM and Inpost SA go up and down completely randomly.
Pair Corralation between GM and Inpost SA
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.41 times more return on investment than Inpost SA. However, GM is 1.41 times more volatile than Inpost SA. It trades about 0.14 of its potential returns per unit of risk. Inpost SA is currently generating about -0.14 per unit of risk. If you would invest 5,180 in General Motors on September 3, 2024 and sell it today you would earn a total of 379.00 from holding General Motors or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
General Motors vs. Inpost SA
Performance |
| Timeline |
| General Motors |
| Inpost SA |
GM and Inpost SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Inpost SA
The main advantage of trading using opposite GM and Inpost SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Inpost SA 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 Inpost SA will offset losses from the drop in Inpost SA's long position.The idea behind General Motors and Inpost SA 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.| Inpost SA vs. PostNL NV | Inpost SA vs. Koninklijke Heijmans NV | Inpost SA vs. OCI NV | Inpost SA vs. Koninklijke Vopak NV |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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