Correlation Between GENERAL and Eastman Kodak

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

By analyzing existing cross correlation between GENERAL ELEC CAP and Eastman Kodak Co, you can compare the effects of market volatilities on GENERAL and Eastman Kodak 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 GENERAL with a short position of Eastman Kodak. Check out your portfolio center. Please also check ongoing floating volatility patterns of GENERAL and Eastman Kodak.

Diversification Opportunities for GENERAL and Eastman Kodak

-0.07

Correlation Coefficient

GENERAL  Eastman Kodak

Good diversification

The 3 months correlation between GENERAL and Eastman is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding GENERAL ELEC CAP and Eastman Kodak Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Kodak and GENERAL 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 ELEC CAP are associated (or correlated) with Eastman Kodak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Kodak has no effect on the direction of GENERAL i.e., GENERAL and Eastman Kodak go up and down completely randomly.

Pair Corralation between GENERAL and Eastman Kodak

Assuming the 90 days trading horizon GENERAL ELEC CAP is expected to generate 0.48 times more return on investment than Eastman Kodak. However, GENERAL ELEC CAP is 2.08 times less risky than Eastman Kodak. It trades about 0.04 of its potential returns per unit of risk. Eastman Kodak Co is currently generating about -0.05 per unit of risk. If you would invest  9,755  in GENERAL ELEC CAP on December 25, 2024 and sell it today you would earn a total of  172.00  from holding GENERAL ELEC CAP or generate 1.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	56.67%
Values	Daily Returns

GENERAL ELEC CAP  vs.  Eastman Kodak Co

GENERAL ELEC CAP

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GENERAL ELEC CAP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, GENERAL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Eastman Kodak

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eastman Kodak Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with GENERAL and Eastman Kodak

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

The idea behind GENERAL ELEC CAP and Eastman Kodak 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.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.