Correlation Between GM and Haw ParLtd

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

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

Diversification Opportunities for GM and Haw ParLtd

0.0

Correlation Coefficient

GM  Haw ParLtd

Pay attention - limited upside

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

Pair Corralation between GM and Haw ParLtd

If you would invest  2,864  in Haw Par on December 25, 2024 and sell it today you would earn a total of  0.00  from holding Haw Par or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

General Motors  vs.  Haw Par

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.

Haw ParLtd

Risk-Adjusted Performance

Very Weak

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

Pair Trading with GM and Haw ParLtd

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

The idea behind General Motors and Haw Par 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.