Correlation Between GM and Arcis Resources

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

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

Diversification Opportunities for GM and Arcis Resources

0.0

Correlation Coefficient

GM  Arcis Resources

Pay attention - limited upside

The 3 months correlation between GM and Arcis is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Arcis Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcis Resources Corp 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 Arcis Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcis Resources Corp has no effect on the direction of GM i.e., GM and Arcis Resources go up and down completely randomly.

Pair Corralation between GM and Arcis Resources

If you would invest  4,676  in General Motors on September 16, 2024 and sell it today you would earn a total of  577.00  from holding General Motors or generate 12.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

General Motors  vs.  Arcis Resources Corp

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.

Arcis Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arcis Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Arcis Resources is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GM and Arcis Resources

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

The idea behind General Motors and Arcis Resources Corp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.