Correlation Between GM and Immunic

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

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

Diversification Opportunities for GM and Immunic

-0.45

Correlation Coefficient

GM  Immunic

Very good diversification

The 3 months correlation between GM and Immunic is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Immunic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immunic 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 Immunic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immunic has no effect on the direction of GM i.e., GM and Immunic go up and down completely randomly.

Pair Corralation between GM and Immunic

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.5 times more return on investment than Immunic. However, General Motors is 2.01 times less risky than Immunic. It trades about 0.05 of its potential returns per unit of risk. Immunic is currently generating about 0.0 per unit of risk. If you would invest  4,604  in General Motors on October 7, 2024 and sell it today you would earn a total of  573.00  from holding General Motors or generate 12.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

General Motors  vs.  Immunic

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.

Immunic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Immunic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with GM and Immunic

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

The idea behind General Motors and Immunic 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.

Check out your portfolio center.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.