Correlation Between GM and Nykode Therapeutics
Can any of the company-specific risk be diversified away by investing in both GM and Nykode Therapeutics 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 Nykode Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Nykode Therapeutics ASA, you can compare the effects of market volatilities on GM and Nykode Therapeutics 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 Nykode Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Nykode Therapeutics.
Diversification Opportunities for GM and Nykode Therapeutics
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Nykode is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Nykode Therapeutics ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nykode Therapeutics ASA 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 Nykode Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nykode Therapeutics ASA has no effect on the direction of GM i.e., GM and Nykode Therapeutics go up and down completely randomly.
Pair Corralation between GM and Nykode Therapeutics
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.28 times more return on investment than Nykode Therapeutics. However, General Motors is 3.58 times less risky than Nykode Therapeutics. It trades about 0.07 of its potential returns per unit of risk. Nykode Therapeutics ASA is currently generating about -0.19 per unit of risk. If you would invest 5,273 in General Motors on August 29, 2024 and sell it today you would earn a total of 206.00 from holding General Motors or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Nykode Therapeutics ASA
Performance |
| Timeline |
| General Motors |
| Nykode Therapeutics ASA |
GM and Nykode Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Nykode Therapeutics
The main advantage of trading using opposite GM and Nykode Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Nykode Therapeutics 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 Nykode Therapeutics will offset losses from the drop in Nykode Therapeutics' long position.The idea behind General Motors and Nykode Therapeutics ASA 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.| Nykode Therapeutics vs. Equinor ASA | Nykode Therapeutics vs. DnB ASA | Nykode Therapeutics vs. Aker BP ASA | Nykode Therapeutics vs. Telenor ASA |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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