Correlation Between GM and SOPHEON PLC

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

Diversification Opportunities for GM and SOPHEON PLC

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between GM and SOPHEON is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and SOPHEON PLC ORD 20P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOPHEON PLC ORD 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 SOPHEON PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOPHEON PLC ORD has no effect on the direction of GM i.e., GM and SOPHEON PLC go up and down completely randomly.

Pair Corralation between GM and SOPHEON PLC

If you would invest (100.00)  in SOPHEON PLC ORD on July 5, 2022 and sell it today you would earn a total of  100.00  from holding SOPHEON PLC ORD or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

General Motors  vs.  SOPHEON PLC ORD 20P

 Performance (%) 
       Timeline  
General Motors 
GM Performance
0 of 100
Over the last 90 days General Motors has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady primary indicators, GM is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

GM Price Channel

SOPHEON PLC ORD 
SOPHEON Performance
0 of 100
Over the last 90 days SOPHEON PLC ORD has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, SOPHEON PLC is not utilizing all of its potentials. The new stock price chaos, may contribute to medium-term losses for the stakeholders.

GM and SOPHEON PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GM and SOPHEON PLC

The main advantage of trading using opposite GM and SOPHEON PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, SOPHEON PLC 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 SOPHEON PLC will offset losses from the drop in SOPHEON PLC's long position.
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The idea behind General Motors and SOPHEON PLC ORD 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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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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