Correlation Between GM and NDASS

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Can any of the company-specific risk be diversified away by investing in both GM and NDASS 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 NDASS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and NDASS 6625, you can compare the effects of market volatilities on GM and NDASS 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 NDASS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and NDASS.

Diversification Opportunities for GM and NDASS

0.77
  Correlation Coefficient
 GM

Poor diversification

The 3 months correlation between GM and NDASS is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and NDASS 6625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NDASS 6625 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 NDASS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NDASS 6625 has no effect on the direction of GM i.e., GM and NDASS go up and down completely randomly.

Pair Corralation between GM and NDASS

Allowing for the 90-day total investment horizon General Motors is expected to generate 2.13 times more return on investment than NDASS. However, GM is 2.13 times more volatile than NDASS 6625. It trades about 0.05 of its potential returns per unit of risk. NDASS 6625 is currently generating about 0.03 per unit of risk. If you would invest  3,583  in General Motors on September 4, 2024 and sell it today you would earn a total of  1,921  from holding General Motors or generate 53.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy15.58%
ValuesDaily Returns

General Motors  vs.  NDASS 6625

 Performance 
       Timeline  
General Motors 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.
NDASS 6625 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in NDASS 6625 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NDASS is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

GM and NDASS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GM and NDASS

The main advantage of trading using opposite GM and NDASS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, NDASS 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 NDASS will offset losses from the drop in NDASS's long position.
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The idea behind General Motors and NDASS 6625 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.
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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