Correlation Between GM and Tecnisa SA
Can any of the company-specific risk be diversified away by investing in both GM and Tecnisa SA 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 Tecnisa SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Tecnisa SA, you can compare the effects of market volatilities on GM and Tecnisa SA 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 Tecnisa SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Tecnisa SA.
Diversification Opportunities for GM and Tecnisa SA
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Tecnisa is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Tecnisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tecnisa 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 Tecnisa SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tecnisa SA has no effect on the direction of GM i.e., GM and Tecnisa SA go up and down completely randomly.
Pair Corralation between GM and Tecnisa SA
Allowing for the 90-day total investment horizon GM is expected to generate 1.36 times less return on investment than Tecnisa SA. But when comparing it to its historical volatility, General Motors is 1.11 times less risky than Tecnisa SA. It trades about 0.07 of its potential returns per unit of risk. Tecnisa SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 140.00 in Tecnisa SA on August 29, 2024 and sell it today you would earn a total of 7.00 from holding Tecnisa SA or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
General Motors vs. Tecnisa SA
Performance |
| Timeline |
| General Motors |
| Tecnisa SA |
GM and Tecnisa SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Tecnisa SA
The main advantage of trading using opposite GM and Tecnisa SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Tecnisa SA 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 Tecnisa SA will offset losses from the drop in Tecnisa SA's long position.The idea behind General Motors and Tecnisa 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.| Tecnisa SA vs. Helbor Empreendimentos SA | Tecnisa SA vs. Gafisa SA | Tecnisa SA vs. JHSF Participaes SA | Tecnisa SA vs. Even Construtora e |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |