Correlation Between GM and Stemsation International
Can any of the company-specific risk be diversified away by investing in both GM and Stemsation International 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 Stemsation International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Stemsation International, you can compare the effects of market volatilities on GM and Stemsation International 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 Stemsation International. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Stemsation International.
Diversification Opportunities for GM and Stemsation International
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Stemsation is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Stemsation International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stemsation International 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 Stemsation International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stemsation International has no effect on the direction of GM i.e., GM and Stemsation International go up and down completely randomly.
Pair Corralation between GM and Stemsation International
Allowing for the 90-day total investment horizon GM is expected to generate 7.25 times less return on investment than Stemsation International. But when comparing it to its historical volatility, General Motors is 9.81 times less risky than Stemsation International. It trades about 0.13 of its potential returns per unit of risk. Stemsation International is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Stemsation International on September 1, 2024 and sell it today you would earn a total of 0.53 from holding Stemsation International or generate 53.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
General Motors vs. Stemsation International
Performance |
| Timeline |
| General Motors |
| Stemsation International |
GM and Stemsation International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Stemsation International
The main advantage of trading using opposite GM and Stemsation International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Stemsation International 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 Stemsation International will offset losses from the drop in Stemsation International's long position.The idea behind General Motors and Stemsation International 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.| Stemsation International vs. Holloman Energy Corp | Stemsation International vs. cbdMD Inc | Stemsation International vs. Evolus Inc | Stemsation International vs. CV Sciences |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Transaction History View history of all your transactions and understand their impact on performance |