Correlation Between GM and Nepa AB
Can any of the company-specific risk be diversified away by investing in both GM and Nepa AB 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 Nepa AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Nepa AB, you can compare the effects of market volatilities on GM and Nepa AB 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 Nepa AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Nepa AB.
Diversification Opportunities for GM and Nepa AB
Very good diversification
The 3 months correlation between GM and Nepa is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Nepa AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nepa 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 Nepa AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nepa AB has no effect on the direction of GM i.e., GM and Nepa AB go up and down completely randomly.
Pair Corralation between GM and Nepa AB
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.57 times more return on investment than Nepa AB. However, General Motors is 1.74 times less risky than Nepa AB. It trades about 0.12 of its potential returns per unit of risk. Nepa AB is currently generating about -0.03 per unit of risk. If you would invest 3,563 in General Motors on August 25, 2024 and sell it today you would earn a total of 2,290 from holding General Motors or generate 64.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.57% |
| Values | Daily Returns |
General Motors vs. Nepa AB
Performance |
| Timeline |
| General Motors |
| Nepa AB |
GM and Nepa AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Nepa AB
The main advantage of trading using opposite GM and Nepa AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Nepa AB 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 Nepa AB will offset losses from the drop in Nepa AB's long position.The idea behind General Motors and Nepa 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.| Nepa AB vs. MAG Interactive AB | Nepa AB vs. Kambi Group PLC | Nepa AB vs. Hexatronic Group AB | Nepa AB vs. Integrum AB Series |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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