Correlation Between GM and OPERADORA

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

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

Diversification Opportunities for GM and OPERADORA

0.68

Correlation Coefficient

GM  OPERADORA

Poor diversification

The 3 months correlation between GM and OPERADORA is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and OPERADORA DE SITES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPERADORA DE SITES 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 OPERADORA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPERADORA DE SITES has no effect on the direction of GM i.e., GM and OPERADORA go up and down completely randomly.

Pair Corralation between GM and OPERADORA

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.53 times more return on investment than OPERADORA. However, General Motors is 1.88 times less risky than OPERADORA. It trades about 0.04 of its potential returns per unit of risk. OPERADORA DE SITES is currently generating about 0.0 per unit of risk. If you would invest  3,370  in General Motors on December 4, 2024 and sell it today you would earn a total of  1,212  from holding General Motors or generate 35.96% return on investment over 90 days.

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

General Motors  vs.  OPERADORA DE SITES

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 April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

OPERADORA DE SITES

Risk-Adjusted Performance

Very Weak

Over the last 90 days OPERADORA DE SITES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, OPERADORA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GM and OPERADORA

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

The idea behind General Motors and OPERADORA DE SITES 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.