Correlation Between GM and 902613AX6

Can any of the company-specific risk be diversified away by investing in both GM and 902613AX6 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 902613AX6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between General Motors and UBS Group 375, you can compare the effects of market volatilities on GM and 902613AX6 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 902613AX6. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and 902613AX6.

Diversification Opportunities for GM and 902613AX6

-0.32

Correlation Coefficient

GM  902613AX6

Very good diversification

The 3 months correlation between GM and 902613AX6 is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and UBS Group 375 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Group 375 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 902613AX6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Group 375 has no effect on the direction of GM i.e., GM and 902613AX6 go up and down completely randomly.

Pair Corralation between GM and 902613AX6

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the 902613AX6. In addition to that, GM is 18.22 times more volatile than UBS Group 375. It trades about -0.07 of its total potential returns per unit of risk. UBS Group 375 is currently generating about -0.12 per unit of volatility. If you would invest  9,977  in UBS Group 375 on December 27, 2024 and sell it today you would lose (97.00) from holding UBS Group 375 or give up 0.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.44%
Values	Daily Returns

General Motors  vs.  UBS Group 375

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.

UBS Group 375

Risk-Adjusted Performance

Very Weak

Over the last 90 days UBS Group 375 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 902613AX6 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GM and 902613AX6

The main advantage of trading using opposite GM and 902613AX6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, 902613AX6 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 902613AX6 will offset losses from the drop in 902613AX6's long position.

The idea behind General Motors and UBS Group 375 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.