Correlation Between GM and Genfit SA
Can any of the company-specific risk be diversified away by investing in both GM and Genfit 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 Genfit 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 Genfit SA, you can compare the effects of market volatilities on GM and Genfit 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 Genfit SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Genfit SA.
Diversification Opportunities for GM and Genfit SA
Very good diversification
The 3 months correlation between GM and Genfit is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Genfit SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genfit 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 Genfit SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genfit SA has no effect on the direction of GM i.e., GM and Genfit SA go up and down completely randomly.
Pair Corralation between GM and Genfit SA
Allowing for the 90-day total investment horizon GM is expected to generate 2.05 times less return on investment than Genfit SA. But when comparing it to its historical volatility, General Motors is 4.45 times less risky than Genfit SA. It trades about 0.07 of its potential returns per unit of risk. Genfit SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 396.00 in Genfit SA on September 19, 2024 and sell it today you would lose (42.00) from holding Genfit SA or give up 10.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.51% |
| Values | Daily Returns |
General Motors vs. Genfit SA
Performance |
| Timeline |
| General Motors |
| Genfit SA |
GM and Genfit SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Genfit SA
The main advantage of trading using opposite GM and Genfit SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Genfit 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 Genfit SA will offset losses from the drop in Genfit SA's long position.The idea behind General Motors and Genfit 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.| Genfit SA vs. Summit Hotel Properties | Genfit SA vs. NORWEGIAN AIR SHUT | Genfit SA vs. Host Hotels Resorts | Genfit SA vs. ALTAIR RES INC |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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