Correlation Between GM and NoHo Partners
Can any of the company-specific risk be diversified away by investing in both GM and NoHo Partners 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 NoHo Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and NoHo Partners Oyj, you can compare the effects of market volatilities on GM and NoHo Partners 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 NoHo Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and NoHo Partners.
Diversification Opportunities for GM and NoHo Partners
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and NoHo is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and NoHo Partners Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NoHo Partners Oyj 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 NoHo Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NoHo Partners Oyj has no effect on the direction of GM i.e., GM and NoHo Partners go up and down completely randomly.
Pair Corralation between GM and NoHo Partners
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.38 times more return on investment than NoHo Partners. However, GM is 2.38 times more volatile than NoHo Partners Oyj. It trades about 0.17 of its potential returns per unit of risk. NoHo Partners Oyj is currently generating about 0.22 per unit of risk. If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
General Motors vs. NoHo Partners Oyj
Performance |
| Timeline |
| General Motors |
| NoHo Partners Oyj |
GM and NoHo Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and NoHo Partners
The main advantage of trading using opposite GM and NoHo Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, NoHo Partners 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 NoHo Partners will offset losses from the drop in NoHo Partners' long position.The idea behind General Motors and NoHo Partners Oyj 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.| NoHo Partners vs. Kamux Suomi Oy | NoHo Partners vs. Harvia Oyj | NoHo Partners vs. Qt Group Oyj | NoHo Partners vs. Revenio 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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