Correlation Between Technicolor and General Motors

Can any of the company-specific risk be diversified away by investing in both Technicolor and General Motors 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 Technicolor and General Motors into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Technicolor and General Motors Co, you can compare the effects of market volatilities on Technicolor and General Motors 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 Technicolor with a short position of General Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technicolor and General Motors.

Diversification Opportunities for Technicolor and General Motors

0.0

Correlation Coefficient

Technicolor  General Motors

Pay attention - limited upside

The 3 months correlation between Technicolor and General is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Technicolor and General Motors Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Motors and Technicolor 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 Technicolor are associated (or correlated) with General Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Motors has no effect on the direction of Technicolor i.e., Technicolor and General Motors go up and down completely randomly.

Pair Corralation between Technicolor and General Motors

If you would invest  12.00  in Technicolor on October 10, 2024 and sell it today you would earn a total of  1.00  from holding Technicolor or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Technicolor  vs.  General Motors Co

Technicolor

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Technicolor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Technicolor unveiled solid returns over the last few months and may actually be approaching a breakup point.

General Motors

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days General Motors Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, General Motors is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Technicolor and General Motors

The main advantage of trading using opposite Technicolor and General Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technicolor position performs unexpectedly, General Motors 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 General Motors will offset losses from the drop in General Motors' long position.

The idea behind Technicolor and General Motors Co 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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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.