Correlation Between GM and Titan Pharmaceuticals

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

Diversification Opportunities for GM and Titan Pharmaceuticals

0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between GM and Titan is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Titan Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Pharmaceuticals 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 Titan Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Pharmaceuticals has no effect on the direction of GM i.e., GM and Titan Pharmaceuticals go up and down completely randomly.

Pair Corralation between GM and Titan Pharmaceuticals

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.39 times more return on investment than Titan Pharmaceuticals. However, General Motors is 2.56 times less risky than Titan Pharmaceuticals. It trades about 0.02 of its potential returns per unit of risk. Titan Pharmaceuticals is currently generating about 0.0 per unit of risk. If you would invest  3,961  in General Motors on December 30, 2023 and sell it today you would earn a total of  574.00  from holding General Motors or generate 14.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.8%
ValuesDaily Returns

General Motors  vs.  Titan Pharmaceuticals

 Performance 
       Timeline  
General Motors 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.
Titan Pharmaceuticals 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Titan Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Titan Pharmaceuticals is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

GM and Titan Pharmaceuticals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GM and Titan Pharmaceuticals

The main advantage of trading using opposite GM and Titan Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Titan Pharmaceuticals 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 Titan Pharmaceuticals will offset losses from the drop in Titan Pharmaceuticals' long position.
The idea behind General Motors and Titan Pharmaceuticals 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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