Correlation Between GM and INTNED

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

By analyzing existing cross correlation between General Motors and INTNED 3875, you can compare the effects of market volatilities on GM and INTNED 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 INTNED. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and INTNED.

Diversification Opportunities for GM and INTNED

0.12

Correlation Coefficient

GM  INTNED

Average diversification

The 3 months correlation between GM and INTNED is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and INTNED 3875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTNED 3875 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 INTNED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTNED 3875 has no effect on the direction of GM i.e., GM and INTNED go up and down completely randomly.

Pair Corralation between GM and INTNED

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the INTNED. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 2.99 times less risky than INTNED. The stock trades about -0.16 of its potential returns per unit of risk. The INTNED 3875 is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  9,012  in INTNED 3875 on September 19, 2024 and sell it today you would lose (579.00) from holding INTNED 3875 or give up 6.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	71.43%
Values	Daily Returns

General Motors  vs.  INTNED 3875

General Motors

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in January 2025.

INTNED 3875

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INTNED 3875 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, INTNED sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GM and INTNED

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

The idea behind General Motors and INTNED 3875 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .