Correlation Between GM and Gajah Tunggal
Can any of the company-specific risk be diversified away by investing in both GM and Gajah Tunggal 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 Gajah Tunggal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Gajah Tunggal Tbk, you can compare the effects of market volatilities on GM and Gajah Tunggal 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 Gajah Tunggal. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Gajah Tunggal.
Diversification Opportunities for GM and Gajah Tunggal
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Gajah is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Gajah Tunggal Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gajah Tunggal 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 Gajah Tunggal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gajah Tunggal Tbk has no effect on the direction of GM i.e., GM and Gajah Tunggal go up and down completely randomly.
Pair Corralation between GM and Gajah Tunggal
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.56 times more return on investment than Gajah Tunggal. However, General Motors is 1.77 times less risky than Gajah Tunggal. It trades about 0.07 of its potential returns per unit of risk. Gajah Tunggal Tbk is currently generating about 0.02 per unit of risk. If you would invest 3,889 in General Motors on August 28, 2024 and sell it today you would earn a total of 2,131 from holding General Motors or generate 54.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.76% |
| Values | Daily Returns |
General Motors vs. Gajah Tunggal Tbk
Performance |
| Timeline |
| General Motors |
| Gajah Tunggal Tbk |
GM and Gajah Tunggal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Gajah Tunggal
The main advantage of trading using opposite GM and Gajah Tunggal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Gajah Tunggal 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 Gajah Tunggal will offset losses from the drop in Gajah Tunggal's long position.The idea behind General Motors and Gajah Tunggal 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.| Gajah Tunggal vs. Perusahaan Perkebunan London | Gajah Tunggal vs. Solusi Bangun Indonesia | Gajah Tunggal vs. Ciputra Development Tbk | Gajah Tunggal vs. Global Mediacom Tbk |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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