Correlation Between GM and AnalytixInsight

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

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

Diversification Opportunities for GM and AnalytixInsight

-0.57

Correlation Coefficient

GM  AnalytixInsight

Excellent diversification

The 3 months correlation between GM and AnalytixInsight is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and AnalytixInsight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AnalytixInsight 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 AnalytixInsight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AnalytixInsight has no effect on the direction of GM i.e., GM and AnalytixInsight go up and down completely randomly.

Pair Corralation between GM and AnalytixInsight

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the AnalytixInsight. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 8.71 times less risky than AnalytixInsight. The stock trades about -0.13 of its potential returns per unit of risk. The AnalytixInsight is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1.60  in AnalytixInsight on November 28, 2024 and sell it today you would earn a total of  1.60  from holding AnalytixInsight or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

General Motors  vs.  AnalytixInsight

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 weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

AnalytixInsight

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AnalytixInsight are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AnalytixInsight reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GM and AnalytixInsight

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

The idea behind General Motors and AnalytixInsight 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.