Correlation Between GM and Argo Pantes
Can any of the company-specific risk be diversified away by investing in both GM and Argo Pantes 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 Argo Pantes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Argo Pantes Tbk, you can compare the effects of market volatilities on GM and Argo Pantes 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 Argo Pantes. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Argo Pantes.
Diversification Opportunities for GM and Argo Pantes
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Argo is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Argo Pantes Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Pantes Tbk 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 Argo Pantes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Pantes Tbk has no effect on the direction of GM i.e., GM and Argo Pantes go up and down completely randomly.
Pair Corralation between GM and Argo Pantes
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Argo Pantes. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 2.41 times less risky than Argo Pantes. The stock trades about -0.13 of its potential returns per unit of risk. The Argo Pantes Tbk is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 96,500 in Argo Pantes Tbk on November 27, 2024 and sell it today you would lose (17,500) from holding Argo Pantes Tbk or give up 18.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.55% |
| Values | Daily Returns |
General Motors vs. Argo Pantes Tbk
Performance |
| Timeline |
| General Motors |
| Argo Pantes Tbk |
GM and Argo Pantes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Argo Pantes
The main advantage of trading using opposite GM and Argo Pantes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Argo Pantes 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 Argo Pantes will offset losses from the drop in Argo Pantes' long position.The idea behind General Motors and Argo Pantes Tbk 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.| Argo Pantes vs. Sepatu Bata Tbk | Argo Pantes vs. Ever Shine Textile | Argo Pantes vs. Eratex Djaja Tbk | Argo Pantes vs. PT Century Textile |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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