Correlation Between GM and Raisio Oyj

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

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

Diversification Opportunities for GM and Raisio Oyj

-0.59

Correlation Coefficient

GM  Raisio Oyj

Excellent diversification

The 3 months correlation between GM and Raisio is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Raisio Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raisio Oyj 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 Raisio Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raisio Oyj has no effect on the direction of GM i.e., GM and Raisio Oyj go up and down completely randomly.

Pair Corralation between GM and Raisio Oyj

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Raisio Oyj. In addition to that, GM is 1.63 times more volatile than Raisio Oyj. It trades about -0.01 of its total potential returns per unit of risk. Raisio Oyj is currently generating about 0.08 per unit of volatility. If you would invest  220.00  in Raisio Oyj on December 20, 2024 and sell it today you would earn a total of  15.00  from holding Raisio Oyj or generate 6.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

General Motors  vs.  Raisio Oyj

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.

Raisio Oyj

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Raisio Oyj are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Raisio Oyj may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with GM and Raisio Oyj

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

The idea behind General Motors and Raisio Oyj 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.