Correlation Between GM and PT Harapan
Can any of the company-specific risk be diversified away by investing in both GM and PT Harapan 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 PT Harapan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and PT Harapan Duta, you can compare the effects of market volatilities on GM and PT Harapan 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 PT Harapan. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and PT Harapan.
Diversification Opportunities for GM and PT Harapan
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and HOPE is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and PT Harapan Duta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Harapan Duta 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 PT Harapan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Harapan Duta has no effect on the direction of GM i.e., GM and PT Harapan go up and down completely randomly.
Pair Corralation between GM and PT Harapan
Allowing for the 90-day total investment horizon GM is expected to generate 1.38 times less return on investment than PT Harapan. But when comparing it to its historical volatility, General Motors is 2.02 times less risky than PT Harapan. It trades about 0.08 of its potential returns per unit of risk. PT Harapan Duta is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,900 in PT Harapan Duta on September 1, 2024 and sell it today you would earn a total of 600.00 from holding PT Harapan Duta or generate 20.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
General Motors vs. PT Harapan Duta
Performance |
| Timeline |
| General Motors |
| PT Harapan Duta |
GM and PT Harapan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and PT Harapan
The main advantage of trading using opposite GM and PT Harapan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, PT Harapan 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 PT Harapan will offset losses from the drop in PT Harapan's long position.The idea behind General Motors and PT Harapan Duta 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.| PT Harapan vs. Ladangbaja Murni PT | PT Harapan vs. Berkah Beton Sadaya | PT Harapan vs. Cahayaputra Asa Keramik | PT Harapan vs. Diagnos Laboratorium Utama |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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