Correlation Between GM and Namyong Terminal

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

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

Diversification Opportunities for GM and Namyong Terminal

-0.72

Correlation Coefficient

GM  Namyong Terminal

Pay attention - limited upside

The 3 months correlation between GM and Namyong is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Namyong Terminal PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namyong Terminal PCL 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 Namyong Terminal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namyong Terminal PCL has no effect on the direction of GM i.e., GM and Namyong Terminal go up and down completely randomly.

Pair Corralation between GM and Namyong Terminal

Allowing for the 90-day total investment horizon General Motors is expected to generate 1.08 times more return on investment than Namyong Terminal. However, GM is 1.08 times more volatile than Namyong Terminal PCL. It trades about 0.05 of its potential returns per unit of risk. Namyong Terminal PCL is currently generating about 0.01 per unit of risk. If you would invest  3,585  in General Motors on October 7, 2024 and sell it today you would earn a total of  1,592  from holding General Motors or generate 44.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.98%
Values	Daily Returns

General Motors  vs.  Namyong Terminal PCL

General Motors

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.

Namyong Terminal PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Namyong Terminal PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with GM and Namyong Terminal

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

The idea behind General Motors and Namyong Terminal PCL 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.