Correlation Between General Electric and Recrusul

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

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

Diversification Opportunities for General Electric and Recrusul

-0.59

Correlation Coefficient

General Electric  Recrusul

Excellent diversification

The 3 months correlation between General and Recrusul is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding General Electric and Recrusul SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Recrusul SA and General Electric 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 Electric are associated (or correlated) with Recrusul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Recrusul SA has no effect on the direction of General Electric i.e., General Electric and Recrusul go up and down completely randomly.

Pair Corralation between General Electric and Recrusul

Assuming the 90 days trading horizon General Electric is expected to generate 0.38 times more return on investment than Recrusul. However, General Electric is 2.65 times less risky than Recrusul. It trades about 0.02 of its potential returns per unit of risk. Recrusul SA is currently generating about -0.06 per unit of risk. If you would invest  99,062  in General Electric on September 13, 2024 and sell it today you would earn a total of  1,698  from holding General Electric or generate 1.71% return on investment over 90 days.

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

General Electric  vs.  Recrusul SA

General Electric

Risk-Adjusted Performance

1 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in General Electric are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, General Electric is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Recrusul SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Recrusul SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with General Electric and Recrusul

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

The idea behind General Electric and Recrusul 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.

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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.