Correlation Between MIRA Pharmaceuticals and GM

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

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

Diversification Opportunities for MIRA Pharmaceuticals and GM

-0.6

Correlation Coefficient

MIRA Pharmaceuticals  GM

Excellent diversification

The 3 months correlation between MIRA and GM is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding MIRA Pharmaceuticals Common and General Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Motors and MIRA Pharmaceuticals 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 MIRA Pharmaceuticals Common are associated (or correlated) with GM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Motors has no effect on the direction of MIRA Pharmaceuticals i.e., MIRA Pharmaceuticals and GM go up and down completely randomly.

Pair Corralation between MIRA Pharmaceuticals and GM

Given the investment horizon of 90 days MIRA Pharmaceuticals Common is expected to generate 7.16 times more return on investment than GM. However, MIRA Pharmaceuticals is 7.16 times more volatile than General Motors. It trades about 0.03 of its potential returns per unit of risk. General Motors is currently generating about 0.11 per unit of risk. If you would invest  93.00  in MIRA Pharmaceuticals Common on March 5, 2024 and sell it today you would lose (11.00) from holding MIRA Pharmaceuticals Common or give up 11.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

MIRA Pharmaceuticals Common  vs.  General Motors

MIRA Pharmaceuticals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MIRA Pharmaceuticals Common are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MIRA Pharmaceuticals sustained solid returns over the last few months and may actually be approaching a breakup point.

General Motors

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with MIRA Pharmaceuticals and GM

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

The idea behind MIRA Pharmaceuticals Common and General Motors 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 Stocks Directory module to find actively traded stocks across global markets.