Correlation Between GM and OC Oerlikon
Can any of the company-specific risk be diversified away by investing in both GM and OC Oerlikon 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 OC Oerlikon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and OC Oerlikon Corp, you can compare the effects of market volatilities on GM and OC Oerlikon 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 OC Oerlikon. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and OC Oerlikon.
Diversification Opportunities for GM and OC Oerlikon
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and OERL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and OC Oerlikon Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OC Oerlikon Corp 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 OC Oerlikon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OC Oerlikon Corp has no effect on the direction of GM i.e., GM and OC Oerlikon go up and down completely randomly.
Pair Corralation between GM and OC Oerlikon
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.05 times more return on investment than OC Oerlikon. However, GM is 1.05 times more volatile than OC Oerlikon Corp. It trades about 0.06 of its potential returns per unit of risk. OC Oerlikon Corp is currently generating about 0.02 per unit of risk. If you would invest 3,816 in General Motors on November 5, 2024 and sell it today you would earn a total of 1,130 from holding General Motors or generate 29.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
General Motors vs. OC Oerlikon Corp
Performance |
| Timeline |
| General Motors |
| OC Oerlikon Corp |
GM and OC Oerlikon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and OC Oerlikon
The main advantage of trading using opposite GM and OC Oerlikon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, OC Oerlikon 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 OC Oerlikon will offset losses from the drop in OC Oerlikon's long position.The idea behind General Motors and OC Oerlikon Corp 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.| OC Oerlikon vs. Sulzer AG | OC Oerlikon vs. Helvetia Holding AG | OC Oerlikon vs. Swiss Life Holding | OC Oerlikon vs. Adecco Group AG |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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