Correlation Between GM and HealthwarehouseCom

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

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

Diversification Opportunities for GM and HealthwarehouseCom

0.21

Correlation Coefficient

GM  HealthwarehouseCom

Modest diversification

The 3 months correlation between GM and HealthwarehouseCom is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and HealthwarehouseCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealthwarehouseCom 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 HealthwarehouseCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HealthwarehouseCom has no effect on the direction of GM i.e., GM and HealthwarehouseCom go up and down completely randomly.

Pair Corralation between GM and HealthwarehouseCom

If you would invest  4,829  in General Motors on August 31, 2024 and sell it today you would earn a total of  721.00  from holding General Motors or generate 14.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

General Motors  vs.  HealthwarehouseCom

General Motors

Risk-Adjusted Performance

7 of 100

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.

HealthwarehouseCom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HealthwarehouseCom has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HealthwarehouseCom 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 HealthwarehouseCom

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

The idea behind General Motors and HealthwarehouseCom 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.