Correlation Between Danieli Spa and General Electric

By analyzing existing cross correlation between Danieli Spa and General Electric, you can compare the effects of market volatilities on Danieli Spa and General Electric 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 Danieli Spa with a short position of General Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danieli Spa and General Electric.

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

Diversification Opportunities for Danieli Spa and General Electric

0.48
  Correlation Coefficient
Danieli Spa
General Electric

Very weak diversification

The 3 months correlation between Danieli and General is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Danieli Spa and General Electric in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on General Electric and Danieli Spa 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 Danieli Spa are associated (or correlated) with General Electric. 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 Danieli Spa i.e., Danieli Spa and General Electric go up and down completely randomly.

Pair Corralation between Danieli Spa and General Electric

Assuming the 90 days horizon Danieli Spa is expected to under-perform the General Electric. But the otc stock apears to be less risky and, when comparing its historical volatility, Danieli Spa is 3.8 times less risky than General Electric. The otc stock trades about -0.22 of its potential returns per unit of risk. The General Electric is currently generating about 0.54 of returns per unit of risk over similar time horizon. If you would invest  8,998  in General Electric on October 19, 2021 and sell it today you would earn a total of  1,318  from holding General Electric or generate 14.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Danieli Spa  vs.  General Electric

 Performance (%) 
      Timeline 
Danieli Spa 
Danieli Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Danieli Spa are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Danieli Spa may actually be approaching a critical reversion point that can send shares even higher in February 2022.

Danieli Price Channel

General Electric 
General Performance
0 of 100
Over the last 90 days General Electric has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, General Electric is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

General Price Channel

Danieli Spa and General Electric Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Danieli Spa and General Electric

The main advantage of trading using opposite Danieli Spa and General Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danieli Spa position performs unexpectedly, General Electric 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 Electric will offset losses from the drop in General Electric's long position.
The idea behind Danieli Spa and General Electric 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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