Correlation Between GM and Bolloré SE

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

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

Diversification Opportunities for GM and Bolloré SE

-0.7

Correlation Coefficient

GM  Bolloré SE

Excellent diversification

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

Pair Corralation between GM and Bolloré SE

Allowing for the 90-day total investment horizon General Motors is expected to generate 1.62 times more return on investment than Bolloré SE. However, GM is 1.62 times more volatile than Bollor SE. It trades about 0.05 of its potential returns per unit of risk. Bollor SE is currently generating about 0.03 per unit of risk. If you would invest  3,462  in General Motors on October 11, 2024 and sell it today you would earn a total of  1,638  from holding General Motors or generate 47.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.0%
Values	Daily Returns

General Motors  vs.  Bollor SE

General Motors

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bolloré SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bollor SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Bolloré SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GM and Bolloré SE

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

The idea behind General Motors and Bollor SE 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.