Correlation Between GM and Morien Resources

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

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

Diversification Opportunities for GM and Morien Resources

-0.28

Correlation Coefficient

GM  Morien Resources

Very good diversification

The 3 months correlation between GM and Morien is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Morien Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morien Resources Corp 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 Morien Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morien Resources Corp has no effect on the direction of GM i.e., GM and Morien Resources go up and down completely randomly.

Pair Corralation between GM and Morien Resources

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Morien Resources. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 2.99 times less risky than Morien Resources. The stock trades about -0.07 of its potential returns per unit of risk. The Morien Resources Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Morien Resources Corp on September 30, 2024 and sell it today you would earn a total of  0.00  from holding Morien Resources Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

General Motors  vs.  Morien Resources Corp

General Motors

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 11 (%) 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.

Morien Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morien Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Morien Resources is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with GM and Morien Resources

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

The idea behind General Motors and Morien Resources Corp 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.