Correlation Between GM and TietoEVRY Corp

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

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

Diversification Opportunities for GM and TietoEVRY Corp

-0.54

Correlation Coefficient

GM  TietoEVRY Corp

Excellent diversification

The 3 months correlation between GM and TietoEVRY is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and TietoEVRY Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TietoEVRY Corp 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 TietoEVRY Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TietoEVRY Corp has no effect on the direction of GM i.e., GM and TietoEVRY Corp go up and down completely randomly.

Pair Corralation between GM and TietoEVRY Corp

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the TietoEVRY Corp. In addition to that, GM is 1.52 times more volatile than TietoEVRY Corp. It trades about -0.06 of its total potential returns per unit of risk. TietoEVRY Corp is currently generating about 0.0 per unit of volatility. If you would invest  1,632  in TietoEVRY Corp on December 29, 2024 and sell it today you would lose (7.00) from holding TietoEVRY Corp or give up 0.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

General Motors  vs.  TietoEVRY Corp

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 abnormal 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.

TietoEVRY Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days TietoEVRY Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, TietoEVRY Corp is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with GM and TietoEVRY Corp

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

The idea behind General Motors and TietoEVRY Corp 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.