Correlation Between GM and Adiuvo Investment

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

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

Diversification Opportunities for GM and Adiuvo Investment

-0.54

Correlation Coefficient

GM  Adiuvo Investment

Excellent diversification

The 3 months correlation between GM and Adiuvo is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Adiuvo Investment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adiuvo Investment 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 Adiuvo Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adiuvo Investment has no effect on the direction of GM i.e., GM and Adiuvo Investment go up and down completely randomly.

Pair Corralation between GM and Adiuvo Investment

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Adiuvo Investment. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 5.61 times less risky than Adiuvo Investment. The stock trades about -0.07 of its potential returns per unit of risk. The Adiuvo Investment SA is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  37.00  in Adiuvo Investment SA on December 2, 2024 and sell it today you would earn a total of  57.00  from holding Adiuvo Investment SA or generate 154.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

General Motors  vs.  Adiuvo Investment SA

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.

Adiuvo Investment

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Adiuvo Investment SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Adiuvo Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GM and Adiuvo Investment

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

The idea behind General Motors and Adiuvo Investment 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.