Correlation Between General Dynamics and SOGECLAIR

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

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

Diversification Opportunities for General Dynamics and SOGECLAIR

-0.27

Correlation Coefficient

General Dynamics  SOGECLAIR

Very good diversification

The 3 months correlation between General and SOGECLAIR is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics and SOGECLAIR SA INH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOGECLAIR SA INH and General Dynamics 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 Dynamics are associated (or correlated) with SOGECLAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOGECLAIR SA INH has no effect on the direction of General Dynamics i.e., General Dynamics and SOGECLAIR go up and down completely randomly.

Pair Corralation between General Dynamics and SOGECLAIR

Assuming the 90 days horizon General Dynamics is expected to generate 0.61 times more return on investment than SOGECLAIR. However, General Dynamics is 1.64 times less risky than SOGECLAIR. It trades about 0.04 of its potential returns per unit of risk. SOGECLAIR SA INH is currently generating about 0.02 per unit of risk. If you would invest  21,185  in General Dynamics on October 7, 2024 and sell it today you would earn a total of  4,380  from holding General Dynamics or generate 20.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

General Dynamics  vs.  SOGECLAIR SA INH

General Dynamics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days General Dynamics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, General Dynamics is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

SOGECLAIR SA INH

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SOGECLAIR SA INH are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SOGECLAIR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with General Dynamics and SOGECLAIR

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

The idea behind General Dynamics and SOGECLAIR SA INH 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 Commodity Directory module to find actively traded commodities issued by global exchanges.