Correlation Between GM and KABE Group
Can any of the company-specific risk be diversified away by investing in both GM and KABE Group 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 KABE Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and KABE Group AB, you can compare the effects of market volatilities on GM and KABE Group 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 KABE Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and KABE Group.
Diversification Opportunities for GM and KABE Group
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and KABE is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and KABE Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KABE Group AB 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 KABE Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KABE Group AB has no effect on the direction of GM i.e., GM and KABE Group go up and down completely randomly.
Pair Corralation between GM and KABE Group
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the KABE Group. In addition to that, GM is 1.93 times more volatile than KABE Group AB. It trades about -0.05 of its total potential returns per unit of risk. KABE Group AB is currently generating about 0.01 per unit of volatility. If you would invest 30,300 in KABE Group AB on November 3, 2024 and sell it today you would earn a total of 0.00 from holding KABE Group AB or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. KABE Group AB
Performance |
| Timeline |
| General Motors |
| KABE Group AB |
GM and KABE Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and KABE Group
The main advantage of trading using opposite GM and KABE Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, KABE Group 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 KABE Group will offset losses from the drop in KABE Group's long position.The idea behind General Motors and KABE Group AB 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.| KABE Group vs. Byggmax Group AB | KABE Group vs. Svedbergs i Dalstorp | KABE Group vs. Inwido AB | KABE Group vs. New Wave Group |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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