Correlation Between GM and PT MNC
Can any of the company-specific risk be diversified away by investing in both GM and PT MNC 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 MNC 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 MNC Energy, you can compare the effects of market volatilities on GM and PT MNC 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 MNC. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and PT MNC.
Diversification Opportunities for GM and PT MNC
Very good diversification
The 3 months correlation between GM and IATA is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and PT MNC Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT MNC Energy 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 MNC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT MNC Energy has no effect on the direction of GM i.e., GM and PT MNC go up and down completely randomly.
Pair Corralation between GM and PT MNC
Allowing for the 90-day total investment horizon GM is expected to generate 1.85 times less return on investment than PT MNC. But when comparing it to its historical volatility, General Motors is 1.14 times less risky than PT MNC. It trades about 0.12 of its potential returns per unit of risk. PT MNC Energy is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 3,900 in PT MNC Energy on August 31, 2024 and sell it today you would earn a total of 500.00 from holding PT MNC Energy or generate 12.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. PT MNC Energy
Performance |
| Timeline |
| General Motors |
| PT MNC Energy |
GM and PT MNC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and PT MNC
The main advantage of trading using opposite GM and PT MNC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, PT MNC 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 MNC will offset losses from the drop in PT MNC's long position.The idea behind General Motors and PT MNC Energy 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 MNC vs. Matahari Department Store | PT MNC vs. Multi Medika Internasional | PT MNC vs. Visi Media Asia | PT MNC vs. Bayan Resources 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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