Correlation Between GM and Mantaro Silver

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

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

Diversification Opportunities for GM and Mantaro Silver

-0.76

Correlation Coefficient

GM  Mantaro Silver

Pay attention - limited upside

The 3 months correlation between GM and Mantaro is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Mantaro Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mantaro Silver Corp 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 Mantaro Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mantaro Silver Corp has no effect on the direction of GM i.e., GM and Mantaro Silver go up and down completely randomly.

Pair Corralation between GM and Mantaro Silver

Allowing for the 90-day total investment horizon GM is expected to generate 6.34 times less return on investment than Mantaro Silver. But when comparing it to its historical volatility, General Motors is 8.04 times less risky than Mantaro Silver. It trades about 0.05 of its potential returns per unit of risk. Mantaro Silver Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  35.00  in Mantaro Silver Corp on December 27, 2024 and sell it today you would lose (31.34) from holding Mantaro Silver Corp or give up 89.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.0%
Values	Daily Returns

General Motors  vs.  Mantaro Silver Corp

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 very healthy primary indicators, GM is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Mantaro Silver Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mantaro Silver Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Mantaro Silver reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GM and Mantaro Silver

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

The idea behind General Motors and Mantaro Silver Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.