Correlation Between GM and Catella AB
Can any of the company-specific risk be diversified away by investing in both GM and Catella 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 Catella 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 Catella AB, you can compare the effects of market volatilities on GM and Catella 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 Catella AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Catella AB.
Diversification Opportunities for GM and Catella AB
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Catella is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Catella AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catella AB 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 Catella AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catella AB has no effect on the direction of GM i.e., GM and Catella AB go up and down completely randomly.
Pair Corralation between GM and Catella AB
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Catella AB. In addition to that, GM is 1.4 times more volatile than Catella AB. It trades about -0.06 of its total potential returns per unit of risk. Catella AB is currently generating about 0.12 per unit of volatility. If you would invest 2,785 in Catella AB on December 28, 2024 and sell it today you would earn a total of 405.00 from holding Catella AB or generate 14.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.36% |
Values | Daily Returns |
General Motors vs. Catella AB
Performance |
Timeline |
General Motors |
Catella AB |
GM and Catella AB Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and Catella AB
The main advantage of trading using opposite GM and Catella AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Catella 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 Catella AB will offset losses from the drop in Catella AB's long position.The idea behind General Motors and Catella AB 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.Catella AB vs. Clas Ohlson AB | Catella AB vs. New Wave Group | Catella AB vs. Bilia AB | Catella AB vs. Inwido AB |
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 CEOs Directory module to screen CEOs from public companies around the world.
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