Correlation Between Space-Communication and GENERAL

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

By analyzing existing cross correlation between Space Communication and GENERAL ELECTRIC CO, you can compare the effects of market volatilities on Space-Communication and GENERAL 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 Space-Communication with a short position of GENERAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Space-Communication and GENERAL.

Diversification Opportunities for Space-Communication and GENERAL

0.0

Correlation Coefficient

Space-Communication  GENERAL

Pay attention - limited upside

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

Pair Corralation between Space-Communication and GENERAL

Assuming the 90 days horizon Space Communication is expected to under-perform the GENERAL. But the pink sheet apears to be less risky and, when comparing its historical volatility, Space Communication is 13.35 times less risky than GENERAL. The pink sheet trades about -0.04 of its potential returns per unit of risk. The GENERAL ELECTRIC CO is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9,276  in GENERAL ELECTRIC CO on October 25, 2024 and sell it today you would earn a total of  419.00  from holding GENERAL ELECTRIC CO or generate 4.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	75.05%
Values	Daily Returns

Space Communication  vs.  GENERAL ELECTRIC CO

Space Communication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Space Communication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Space-Communication is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

GENERAL ELECTRIC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Space-Communication and GENERAL

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

The idea behind Space Communication and GENERAL ELECTRIC CO 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.