Correlation Between GM and SILEON AB

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

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

Diversification Opportunities for GM and SILEON AB

0.18

Correlation Coefficient

GM  SILEON AB

Average diversification

The 3 months correlation between GM and SILEON is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and SILEON AB ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SILEON AB ON 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 SILEON AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SILEON AB ON has no effect on the direction of GM i.e., GM and SILEON AB go up and down completely randomly.

Pair Corralation between GM and SILEON AB

Allowing for the 90-day total investment horizon GM is expected to generate 494.5 times less return on investment than SILEON AB. But when comparing it to its historical volatility, General Motors is 170.39 times less risky than SILEON AB. It trades about 0.14 of its potential returns per unit of risk. SILEON AB ON is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  9.00  in SILEON AB ON on September 30, 2024 and sell it today you would earn a total of  40.00  from holding SILEON AB ON or generate 444.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

General Motors  vs.  SILEON AB ON

General Motors

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 11 (%) 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.

SILEON AB ON

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SILEON AB ON are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SILEON AB reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GM and SILEON AB

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

The idea behind General Motors and SILEON AB ON 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.