Correlation Between GM and Dimerco Data

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

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

Diversification Opportunities for GM and Dimerco Data

-0.7

Correlation Coefficient

GM  Dimerco Data

Excellent diversification

The 3 months correlation between GM and Dimerco is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Dimerco Data System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimerco Data System 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 Dimerco Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimerco Data System has no effect on the direction of GM i.e., GM and Dimerco Data go up and down completely randomly.

Pair Corralation between GM and Dimerco Data

Allowing for the 90-day total investment horizon GM is expected to generate 1.18 times less return on investment than Dimerco Data. In addition to that, GM is 1.29 times more volatile than Dimerco Data System. It trades about 0.06 of its total potential returns per unit of risk. Dimerco Data System is currently generating about 0.09 per unit of volatility. If you would invest  6,485  in Dimerco Data System on September 15, 2024 and sell it today you would earn a total of  5,365  from holding Dimerco Data System or generate 82.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.97%
Values	Daily Returns

General Motors  vs.  Dimerco Data System

General Motors

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.

Dimerco Data System

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dimerco Data System are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Dimerco Data is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with GM and Dimerco Data

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

The idea behind General Motors and Dimerco Data System 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.