Correlation Between GM and AMFAHI

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

By analyzing existing cross correlation between General Motors and AMFAHI 2805 11 MAR 31, you can compare the effects of market volatilities on GM and AMFAHI 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 AMFAHI. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and AMFAHI.

Diversification Opportunities for GM and AMFAHI

0.59

Correlation Coefficient

GM  AMFAHI

Very weak diversification

The 3 months correlation between GM and AMFAHI is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and AMFAHI 2805 11 MAR 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMFAHI 2805 11 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 AMFAHI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMFAHI 2805 11 has no effect on the direction of GM i.e., GM and AMFAHI go up and down completely randomly.

Pair Corralation between GM and AMFAHI

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the AMFAHI. In addition to that, GM is 2.31 times more volatile than AMFAHI 2805 11 MAR 31. It trades about -0.15 of its total potential returns per unit of risk. AMFAHI 2805 11 MAR 31 is currently generating about -0.13 per unit of volatility. If you would invest  7,747  in AMFAHI 2805 11 MAR 31 on September 12, 2024 and sell it today you would lose (141.00) from holding AMFAHI 2805 11 MAR 31 or give up 1.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	57.14%
Values	Daily Returns

General Motors  vs.  AMFAHI 2805 11 MAR 31

General Motors

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.

AMFAHI 2805 11

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMFAHI 2805 11 MAR 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for AMFAHI 2805 11 MAR 31 investors.

Pair Trading with GM and AMFAHI

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

The idea behind General Motors and AMFAHI 2805 11 MAR 31 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.