Correlation Between GM and Quadrise Plc

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

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

Diversification Opportunities for GM and Quadrise Plc

0.66

Correlation Coefficient

GM  Quadrise Plc

Poor diversification

The 3 months correlation between GM and Quadrise is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Quadrise Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quadrise Plc 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 Quadrise Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quadrise Plc has no effect on the direction of GM i.e., GM and Quadrise Plc go up and down completely randomly.

Pair Corralation between GM and Quadrise Plc

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.45 times more return on investment than Quadrise Plc. However, General Motors is 2.21 times less risky than Quadrise Plc. It trades about -0.07 of its potential returns per unit of risk. Quadrise Plc is currently generating about -0.09 per unit of risk. If you would invest  5,414  in General Motors on December 27, 2024 and sell it today you would lose (685.00) from holding General Motors or give up 12.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

General Motors  vs.  Quadrise Plc

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 weak 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.

Quadrise Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quadrise Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with GM and Quadrise Plc

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

The idea behind General Motors and Quadrise Plc 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.