Correlation Between GM and Arkha Jayanti
Can any of the company-specific risk be diversified away by investing in both GM and Arkha Jayanti 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 Arkha Jayanti into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Arkha Jayanti Persada, you can compare the effects of market volatilities on GM and Arkha Jayanti 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 Arkha Jayanti. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Arkha Jayanti.
Diversification Opportunities for GM and Arkha Jayanti
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Arkha is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Arkha Jayanti Persada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arkha Jayanti Persada 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 Arkha Jayanti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arkha Jayanti Persada has no effect on the direction of GM i.e., GM and Arkha Jayanti go up and down completely randomly.
Pair Corralation between GM and Arkha Jayanti
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.55 times more return on investment than Arkha Jayanti. However, General Motors is 1.81 times less risky than Arkha Jayanti. It trades about 0.05 of its potential returns per unit of risk. Arkha Jayanti Persada is currently generating about -0.03 per unit of risk. If you would invest 3,692 in General Motors on September 5, 2024 and sell it today you would earn a total of 1,674 from holding General Motors or generate 45.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.56% |
| Values | Daily Returns |
General Motors vs. Arkha Jayanti Persada
Performance |
| Timeline |
| General Motors |
| Arkha Jayanti Persada |
GM and Arkha Jayanti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Arkha Jayanti
The main advantage of trading using opposite GM and Arkha Jayanti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Arkha Jayanti 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 Arkha Jayanti will offset losses from the drop in Arkha Jayanti's long position.The idea behind General Motors and Arkha Jayanti Persada 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.| Arkha Jayanti vs. Berkah Prima Perkasa | Arkha Jayanti vs. Jasnita Telekomindo Tbk | Arkha Jayanti vs. Darmi Bersaudara Tbk | Arkha Jayanti vs. Agro Yasa Lestari |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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