Correlation Between GM and Condor Resources

Can any of the company-specific risk be diversified away by investing in both GM and Condor 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 Condor 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 Condor Resources, you can compare the effects of market volatilities on GM and Condor 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 Condor Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Condor Resources.

Diversification Opportunities for GM and Condor Resources

0.27

Correlation Coefficient

GM  Condor Resources

Modest diversification

The 3 months correlation between GM and Condor is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Condor Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Condor Resources 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 Condor Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Condor Resources has no effect on the direction of GM i.e., GM and Condor Resources go up and down completely randomly.

Pair Corralation between GM and Condor Resources

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Condor Resources. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 7.09 times less risky than Condor Resources. The stock trades about -0.07 of its potential returns per unit of risk. The Condor Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Condor Resources on November 20, 2024 and sell it today you would lose (4.00) from holding Condor Resources or give up 30.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

General Motors  vs.  Condor Resources

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.

Condor Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Condor Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Condor Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GM and Condor Resources

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

The idea behind General Motors and Condor Resources 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.