Correlation Between GM and 009158BA3

Can any of the company-specific risk be diversified away by investing in both GM and 009158BA3 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 009158BA3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between General Motors and AIR PRODUCTS AND, you can compare the effects of market volatilities on GM and 009158BA3 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 009158BA3. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and 009158BA3.

Diversification Opportunities for GM and 009158BA3

-0.21

Correlation Coefficient

GM  009158BA3

Very good diversification

The 3 months correlation between GM and 009158BA3 is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and AIR PRODUCTS AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODUCTS AND 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 009158BA3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODUCTS AND has no effect on the direction of GM i.e., GM and 009158BA3 go up and down completely randomly.

Pair Corralation between GM and 009158BA3

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the 009158BA3. In addition to that, GM is 1.21 times more volatile than AIR PRODUCTS AND. It trades about -0.07 of its total potential returns per unit of risk. AIR PRODUCTS AND is currently generating about 0.12 per unit of volatility. If you would invest  6,331  in AIR PRODUCTS AND on December 30, 2024 and sell it today you would earn a total of  833.00  from holding AIR PRODUCTS AND or generate 13.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.65%
Values	Daily Returns

General Motors  vs.  AIR PRODUCTS AND

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.

AIR PRODUCTS AND

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AIR PRODUCTS AND are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 009158BA3 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GM and 009158BA3

The main advantage of trading using opposite GM and 009158BA3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, 009158BA3 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 009158BA3 will offset losses from the drop in 009158BA3's long position.

The idea behind General Motors and AIR PRODUCTS AND 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.