Correlation Between GM and 1125 KT

Can any of the company-specific risk be diversified away by investing in both GM and 1125 KT 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 1125 KT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between General Motors and 1125 KT SOLOTH, you can compare the effects of market volatilities on GM and 1125 KT 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 1125 KT. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and 1125 KT.

Diversification Opportunities for GM and 1125 KT

0.0

Correlation Coefficient

GM  1125 KT

Pay attention - limited upside

The 3 months correlation between GM and 1125 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and 1125 KT SOLOTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1125 KT SOLOTH 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 1125 KT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1125 KT SOLOTH has no effect on the direction of GM i.e., GM and 1125 KT go up and down completely randomly.

Pair Corralation between GM and 1125 KT

If you would invest  3,740  in General Motors on October 2, 2024 and sell it today you would earn a total of  1,592  from holding General Motors or generate 42.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

General Motors  vs.  1125 KT SOLOTH

General Motors

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.

1125 KT SOLOTH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 1125 KT SOLOTH has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, 1125 KT 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 1125 KT

The main advantage of trading using opposite GM and 1125 KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, 1125 KT 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 1125 KT will offset losses from the drop in 1125 KT's long position.

The idea behind General Motors and 1125 KT SOLOTH 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.