Correlation Between GM and Genmab AS

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Can any of the company-specific risk be diversified away by investing in both GM and Genmab AS 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 Genmab AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Genmab AS, you can compare the effects of market volatilities on GM and Genmab AS 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 Genmab AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Genmab AS.

Diversification Opportunities for GM and Genmab AS

-0.05
  Correlation Coefficient

Good diversification

The 3 months correlation between GM and Genmab is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Genmab AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genmab AS 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 Genmab AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genmab AS has no effect on the direction of GM i.e., GM and Genmab AS go up and down completely randomly.

Pair Corralation between GM and Genmab AS

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.87 times more return on investment than Genmab AS. However, General Motors is 1.14 times less risky than Genmab AS. It trades about 0.32 of its potential returns per unit of risk. Genmab AS is currently generating about 0.1 per unit of risk. If you would invest  3,529  in General Motors on December 29, 2023 and sell it today you would earn a total of  930.00  from holding General Motors or generate 26.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.67%
ValuesDaily Returns

General Motors  vs.  Genmab AS

 Performance 
       Timeline  
General Motors 

Risk-Adjusted Performance

17 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 17 (%) 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.
Genmab AS 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Genmab AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Genmab AS is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

GM and Genmab AS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GM and Genmab AS

The main advantage of trading using opposite GM and Genmab AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Genmab AS 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 Genmab AS will offset losses from the drop in Genmab AS's long position.
The idea behind General Motors and Genmab AS 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 the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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