Correlation Between GM and HANNRUECKVSE ADR

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

By analyzing existing cross correlation between General Motors and HANNRUECKVSE ADR 12ON, you can compare the effects of market volatilities on GM and HANNRUECKVSE ADR 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 HANNRUECKVSE ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and HANNRUECKVSE ADR.

Diversification Opportunities for GM and HANNRUECKVSE ADR

-0.52

Correlation Coefficient

GM  HANNRUECKVSE ADR

Excellent diversification

The 3 months correlation between GM and HANNRUECKVSE is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and HANNRUECKVSE ADR 12ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANNRUECKVSE ADR 12ON 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 HANNRUECKVSE ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANNRUECKVSE ADR 12ON has no effect on the direction of GM i.e., GM and HANNRUECKVSE ADR go up and down completely randomly.

Pair Corralation between GM and HANNRUECKVSE ADR

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the HANNRUECKVSE ADR. In addition to that, GM is 1.96 times more volatile than HANNRUECKVSE ADR 12ON. It trades about -0.31 of its total potential returns per unit of risk. HANNRUECKVSE ADR 12ON is currently generating about -0.03 per unit of volatility. If you would invest  4,080  in HANNRUECKVSE ADR 12ON on September 24, 2024 and sell it today you would lose (40.00) from holding HANNRUECKVSE ADR 12ON or give up 0.98% of portfolio value over 90 days.

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

General Motors  vs.  HANNRUECKVSE ADR 12ON

General Motors

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in January 2025.

HANNRUECKVSE ADR 12ON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HANNRUECKVSE ADR 12ON has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HANNRUECKVSE ADR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GM and HANNRUECKVSE ADR

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

The idea behind General Motors and HANNRUECKVSE ADR 12ON 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.