Correlation Between GM and SVENSKA CELLULO

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

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

Diversification Opportunities for GM and SVENSKA CELLULO

-0.76

Correlation Coefficient

GM  SVENSKA CELLULO

Pay attention - limited upside

The 3 months correlation between GM and SVENSKA is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and SVENSKA CELLULO B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SVENSKA CELLULO B 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 SVENSKA CELLULO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SVENSKA CELLULO B has no effect on the direction of GM i.e., GM and SVENSKA CELLULO go up and down completely randomly.

Pair Corralation between GM and SVENSKA CELLULO

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the SVENSKA CELLULO. In addition to that, GM is 2.05 times more volatile than SVENSKA CELLULO B . It trades about -0.01 of its total potential returns per unit of risk. SVENSKA CELLULO B is currently generating about 0.15 per unit of volatility. If you would invest  1,181  in SVENSKA CELLULO B on December 19, 2024 and sell it today you would earn a total of  127.00  from holding SVENSKA CELLULO B or generate 10.75% return on investment over 90 days.

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

General Motors  vs.  SVENSKA CELLULO B

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.

SVENSKA CELLULO B

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SVENSKA CELLULO B are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SVENSKA CELLULO may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with GM and SVENSKA CELLULO

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

The idea behind General Motors and SVENSKA CELLULO B 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.