Correlation Between GM and Synektik
Can any of the company-specific risk be diversified away by investing in both GM and Synektik 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 Synektik into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Synektik SA, you can compare the effects of market volatilities on GM and Synektik 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 Synektik. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Synektik.
Diversification Opportunities for GM and Synektik
Pay attention - limited upside
The 3 months correlation between GM and Synektik is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Synektik SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synektik SA 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 Synektik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synektik SA has no effect on the direction of GM i.e., GM and Synektik go up and down completely randomly.
Pair Corralation between GM and Synektik
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Synektik. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 1.01 times less risky than Synektik. The stock trades about -0.01 of its potential returns per unit of risk. The Synektik SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 21,700 in Synektik SA on December 1, 2024 and sell it today you would earn a total of 650.00 from holding Synektik SA or generate 3.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
General Motors vs. Synektik SA
Performance |
| Timeline |
| General Motors |
| Synektik SA |
GM and Synektik Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Synektik
The main advantage of trading using opposite GM and Synektik positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Synektik 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 Synektik will offset losses from the drop in Synektik's long position.The idea behind General Motors and Synektik SA 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.| Synektik vs. Banco Santander SA | Synektik vs. UniCredit SpA | Synektik vs. CEZ as | Synektik vs. Polski Koncern Naftowy |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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