Correlation Between GM and TalkPool
Can any of the company-specific risk be diversified away by investing in both GM and TalkPool 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 TalkPool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and TalkPool AG, you can compare the effects of market volatilities on GM and TalkPool 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 TalkPool. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and TalkPool.
Diversification Opportunities for GM and TalkPool
Excellent diversification
The 3 months correlation between GM and TalkPool is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and TalkPool AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TalkPool AG 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 TalkPool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TalkPool AG has no effect on the direction of GM i.e., GM and TalkPool go up and down completely randomly.
Pair Corralation between GM and TalkPool
Allowing for the 90-day total investment horizon GM is expected to generate 1.46 times less return on investment than TalkPool. But when comparing it to its historical volatility, General Motors is 2.26 times less risky than TalkPool. It trades about 0.05 of its potential returns per unit of risk. TalkPool AG is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 520.00 in TalkPool AG on August 29, 2024 and sell it today you would earn a total of 140.00 from holding TalkPool AG or generate 26.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
General Motors vs. TalkPool AG
Performance |
| Timeline |
| General Motors |
| TalkPool AG |
GM and TalkPool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and TalkPool
The main advantage of trading using opposite GM and TalkPool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, TalkPool 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 TalkPool will offset losses from the drop in TalkPool's long position.The idea behind General Motors and TalkPool AG 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.| TalkPool vs. Embracer Group AB | TalkPool vs. Samhllsbyggnadsbolaget i Norden | TalkPool vs. Evolution AB | TalkPool vs. Stillfront Group AB |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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