Correlation Between GM and GSRX Industries

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Can any of the company-specific risk be diversified away by investing in both GM and GSRX Industries 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 GSRX Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and GSRX Industries, you can compare the effects of market volatilities on GM and GSRX Industries 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 GSRX Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and GSRX Industries.

Diversification Opportunities for GM and GSRX Industries

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between GM and GSRX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and GSRX Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSRX Industries 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 GSRX Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSRX Industries has no effect on the direction of GM i.e., GM and GSRX Industries go up and down completely randomly.

Pair Corralation between GM and GSRX Industries

If you would invest  5,370  in General Motors on September 6, 2024 and sell it today you would lose (34.00) from holding General Motors or give up 0.63% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

General Motors  vs.  GSRX Industries

 Performance 
       Timeline  
General Motors 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.
GSRX Industries 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GSRX Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, GSRX Industries is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

GM and GSRX Industries Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GM and GSRX Industries

The main advantage of trading using opposite GM and GSRX Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, GSRX Industries 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 GSRX Industries will offset losses from the drop in GSRX Industries' long position.
The idea behind General Motors and GSRX Industries 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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