Correlation Between GM and Ehave

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

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

Diversification Opportunities for GM and Ehave

-0.16

Correlation Coefficient

GM  Ehave

Good diversification

The 3 months correlation between GM and Ehave is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Ehave Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ehave Inc 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 Ehave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ehave Inc has no effect on the direction of GM i.e., GM and Ehave go up and down completely randomly.

Pair Corralation between GM and Ehave

Allowing for the 90-day total investment horizon GM is expected to generate 214.2 times less return on investment than Ehave. But when comparing it to its historical volatility, General Motors is 60.5 times less risky than Ehave. It trades about 0.04 of its potential returns per unit of risk. Ehave Inc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  0.35  in Ehave Inc on December 4, 2024 and sell it today you would lose (0.03) from holding Ehave Inc or give up 8.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

General Motors  vs.  Ehave Inc

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 April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Ehave Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ehave Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Ehave reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GM and Ehave

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

The idea behind General Motors and Ehave Inc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.