Correlation Between GM and NTG Nordic

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

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

Diversification Opportunities for GM and NTG Nordic

0.13

Correlation Coefficient

GM  NTG Nordic

Average diversification

The 3 months correlation between GM and NTG is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport 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 NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of GM i.e., GM and NTG Nordic go up and down completely randomly.

Pair Corralation between GM and NTG Nordic

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the NTG Nordic. In addition to that, GM is 1.38 times more volatile than NTG Nordic Transport. It trades about -0.01 of its total potential returns per unit of risk. NTG Nordic Transport is currently generating about 0.08 per unit of volatility. If you would invest  26,100  in NTG Nordic Transport on December 25, 2024 and sell it today you would earn a total of  2,150  from holding NTG Nordic Transport or generate 8.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

General Motors  vs.  NTG Nordic Transport

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.

NTG Nordic Transport

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NTG Nordic Transport are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, NTG Nordic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with GM and NTG Nordic

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

The idea behind General Motors and NTG Nordic Transport 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.