Correlation Between GM and Salarius Pharmaceuticals

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

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

Diversification Opportunities for GM and Salarius Pharmaceuticals

0.0

Correlation Coefficient

GM  Salarius Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between GM and Salarius is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Salarius Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salarius Pharmaceuticals 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 Salarius Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salarius Pharmaceuticals has no effect on the direction of GM i.e., GM and Salarius Pharmaceuticals go up and down completely randomly.

Pair Corralation between GM and Salarius Pharmaceuticals

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.2 times more return on investment than Salarius Pharmaceuticals. However, General Motors is 4.95 times less risky than Salarius Pharmaceuticals. It trades about -0.01 of its potential returns per unit of risk. Salarius Pharmaceuticals is currently generating about -0.35 per unit of risk. If you would invest  4,946  in General Motors on December 2, 2024 and sell it today you would lose (33.00) from holding General Motors or give up 0.67% of portfolio value over 90 days.

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

General Motors  vs.  Salarius Pharmaceuticals

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.

Salarius Pharmaceuticals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Salarius Pharmaceuticals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Salarius Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GM and Salarius Pharmaceuticals

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

The idea behind General Motors and Salarius Pharmaceuticals 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.