Correlation Between General Electric and Motus GI

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

Diversification Opportunities for General Electric and Motus GI

-0.5
  Correlation Coefficient

Very good diversification

The 3 months correlation between General and Motus is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding General Electric and Motus GI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motus GI Holdings and General Electric 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 Electric are associated (or correlated) with Motus GI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motus GI Holdings has no effect on the direction of General Electric i.e., General Electric and Motus GI go up and down completely randomly.

Pair Corralation between General Electric and Motus GI

Allowing for the 90-day total investment horizon General Electric is expected to generate 0.32 times more return on investment than Motus GI. However, General Electric is 3.08 times less risky than Motus GI. It trades about 0.01 of its potential returns per unit of risk. Motus GI Holdings is currently generating about -0.06 per unit of risk. If you would invest  8,862  in General Electric on September 2, 2022 and sell it today you would lose (265.00)  from holding General Electric or give up 2.99% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

General Electric  vs.  Motus GI Holdings

 Performance (%) 
       Timeline  
General Electric 
General Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in General Electric are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, General Electric exhibited solid returns over the last few months and may actually be approaching a breakup point.

General Price Channel

Motus GI Holdings 
Motus Performance
0 of 100
Over the last 90 days Motus GI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2023. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Motus Price Channel

General Electric and Motus GI Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with General Electric and Motus GI

The main advantage of trading using opposite General Electric and Motus GI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Electric position performs unexpectedly, Motus GI 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 Motus GI will offset losses from the drop in Motus GI's long position.
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The idea behind General Electric and Motus GI Holdings 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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