Correlation Between GM and Malmbergs Elektriska

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

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

Diversification Opportunities for GM and Malmbergs Elektriska

-0.51

Correlation Coefficient

GM  Malmbergs Elektriska

Excellent diversification

The 3 months correlation between GM and Malmbergs is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Malmbergs Elektriska AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malmbergs Elektriska 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 Malmbergs Elektriska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malmbergs Elektriska has no effect on the direction of GM i.e., GM and Malmbergs Elektriska go up and down completely randomly.

Pair Corralation between GM and Malmbergs Elektriska

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Malmbergs Elektriska. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 1.16 times less risky than Malmbergs Elektriska. The stock trades about -0.07 of its potential returns per unit of risk. The Malmbergs Elektriska AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4,240  in Malmbergs Elektriska AB on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Malmbergs Elektriska AB or generate 2.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

General Motors  vs.  Malmbergs Elektriska AB

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 abnormal 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.

Malmbergs Elektriska

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Malmbergs Elektriska AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Malmbergs Elektriska 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 Malmbergs Elektriska

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

The idea behind General Motors and Malmbergs Elektriska AB 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.