Correlation Between GM and Grenergy Renovables

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

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

Diversification Opportunities for GM and Grenergy Renovables

-0.69

Correlation Coefficient

GM  Grenergy Renovables

Excellent diversification

The 3 months correlation between GM and Grenergy is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Grenergy Renovables SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grenergy Renovables 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 Grenergy Renovables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grenergy Renovables has no effect on the direction of GM i.e., GM and Grenergy Renovables go up and down completely randomly.

Pair Corralation between GM and Grenergy Renovables

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Grenergy Renovables. In addition to that, GM is 1.04 times more volatile than Grenergy Renovables SA. It trades about -0.03 of its total potential returns per unit of risk. Grenergy Renovables SA is currently generating about 0.14 per unit of volatility. If you would invest  3,235  in Grenergy Renovables SA on December 27, 2024 and sell it today you would earn a total of  710.00  from holding Grenergy Renovables SA or generate 21.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

General Motors  vs.  Grenergy Renovables SA

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 very healthy primary indicators, GM is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Grenergy Renovables

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grenergy Renovables SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Grenergy Renovables exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GM and Grenergy Renovables

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

The idea behind General Motors and Grenergy Renovables SA 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.