Correlation Between GM and Semper Paratus

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

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

Diversification Opportunities for GM and Semper Paratus

0.22

Correlation Coefficient

GM  Semper Paratus

Modest diversification

The 3 months correlation between GM and Semper is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Semper Paratus Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semper Paratus Acqui 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 Semper Paratus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semper Paratus Acqui has no effect on the direction of GM i.e., GM and Semper Paratus go up and down completely randomly.

Pair Corralation between GM and Semper Paratus

If you would invest  4,676  in General Motors on September 14, 2024 and sell it today you would earn a total of  554.00  from holding General Motors or generate 11.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

General Motors  vs.  Semper Paratus Acquisition

General Motors

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.

Semper Paratus Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Semper Paratus Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Semper Paratus is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GM and Semper Paratus

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

The idea behind General Motors and Semper Paratus Acquisition 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.