Correlation Between GM and Icelandic Salmon

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

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

Diversification Opportunities for GM and Icelandic Salmon

0.0

Correlation Coefficient

GM  Icelandic Salmon

Pay attention - limited upside

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

Pair Corralation between GM and Icelandic Salmon

If you would invest  0.00  in Icelandic Salmon AS on December 28, 2024 and sell it today you would earn a total of  0.00  from holding Icelandic Salmon AS or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

General Motors  vs.  Icelandic Salmon AS

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 latest weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Icelandic Salmon

Risk-Adjusted Performance

Very Weak

Over the last 90 days Icelandic Salmon AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Icelandic Salmon is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with GM and Icelandic Salmon

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

The idea behind General Motors and Icelandic Salmon AS 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.