Correlation Between GM and QUICKSTEP HLDGS

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

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

Diversification Opportunities for GM and QUICKSTEP HLDGS

-0.2

Correlation Coefficient

GM  QUICKSTEP HLDGS

Good diversification

The 3 months correlation between GM and QUICKSTEP is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and QUICKSTEP HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QUICKSTEP HLDGS 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 QUICKSTEP HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QUICKSTEP HLDGS has no effect on the direction of GM i.e., GM and QUICKSTEP HLDGS go up and down completely randomly.

Pair Corralation between GM and QUICKSTEP HLDGS

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the QUICKSTEP HLDGS. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 2.85 times less risky than QUICKSTEP HLDGS. The stock trades about -0.1 of its potential returns per unit of risk. The QUICKSTEP HLDGS is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  22.00  in QUICKSTEP HLDGS on November 29, 2024 and sell it today you would earn a total of  9.00  from holding QUICKSTEP HLDGS or generate 40.91% return on investment over 90 days.

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

General Motors  vs.  QUICKSTEP HLDGS

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 weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

QUICKSTEP HLDGS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in QUICKSTEP HLDGS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, QUICKSTEP HLDGS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GM and QUICKSTEP HLDGS

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

The idea behind General Motors and QUICKSTEP HLDGS 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.