Correlation Between GM and Migros Ticaret

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

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

Diversification Opportunities for GM and Migros Ticaret

0.24

Correlation Coefficient

GM  Migros Ticaret

Modest diversification

The 3 months correlation between GM and Migros is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Migros Ticaret AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Migros Ticaret AS 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 Migros Ticaret. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Migros Ticaret AS has no effect on the direction of GM i.e., GM and Migros Ticaret go up and down completely randomly.

Pair Corralation between GM and Migros Ticaret

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Migros Ticaret. In addition to that, GM is 1.61 times more volatile than Migros Ticaret AS. It trades about -0.23 of its total potential returns per unit of risk. Migros Ticaret AS is currently generating about 0.21 per unit of volatility. If you would invest  46,475  in Migros Ticaret AS on September 23, 2024 and sell it today you would earn a total of  3,250  from holding Migros Ticaret AS or generate 6.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

General Motors  vs.  Migros Ticaret AS

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.

Migros Ticaret AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Migros Ticaret AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Migros Ticaret is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with GM and Migros Ticaret

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

The idea behind General Motors and Migros Ticaret 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.