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

0.41

Correlation Coefficient

GM  Silla Sg

Very weak diversification

The 3 months correlation between GM and Silla is 0.41. 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 under-perform the Silla Sg. In addition to that, GM is 1.29 times more volatile than Silla Sg Co. It trades about -0.03 of its total potential returns per unit of risk. Silla Sg Co is currently generating about 0.06 per unit of volatility. If you would invest  589,000  in Silla Sg Co on December 27, 2024 and sell it today you would earn a total of  31,000  from holding Silla Sg Co or generate 5.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
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 very healthy primary indicators, GM is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Silla Sg

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Silla Sg Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Silla Sg may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.