Correlation Between GM and Silla Sg

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

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

Diversification Opportunities for GM and Silla Sg

0.07

Correlation Coefficient

GM  Silla Sg

Significant diversification

The 3 months correlation between GM and Silla is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Silla Sg Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silla Sg 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 Silla Sg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silla Sg has no effect on the direction of GM i.e., GM and Silla Sg go up and down completely randomly.

Pair Corralation between GM and Silla Sg

Allowing for the 90-day total investment horizon General Motors is expected to generate 1.78 times more return on investment than Silla Sg. However, GM is 1.78 times more volatile than Silla Sg Co. It trades about -0.02 of its potential returns per unit of risk. Silla Sg Co is currently generating about -0.06 per unit of risk. If you would invest  4,790  in General Motors on December 4, 2024 and sell it today you would lose (52.00) from holding General Motors or give up 1.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

General Motors  vs.  Silla Sg Co

General Motors

Risk-Adjusted Performance

Very Weak

Over the last 90 days General Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Silla Sg

Risk-Adjusted Performance

Very Weak

Over the last 90 days Silla Sg Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with GM and Silla Sg

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

The idea behind General Motors and Silla Sg 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.