Correlation Between GM and PT Puri
Can any of the company-specific risk be diversified away by investing in both GM and PT Puri 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 Puri 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 Puri Sentul, you can compare the effects of market volatilities on GM and PT Puri 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 Puri. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and PT Puri.
Diversification Opportunities for GM and PT Puri
Very good diversification
The 3 months correlation between GM and KDTN is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and PT Puri Sentul in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Puri Sentul 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 Puri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Puri Sentul has no effect on the direction of GM i.e., GM and PT Puri go up and down completely randomly.
Pair Corralation between GM and PT Puri
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.66 times more return on investment than PT Puri. However, General Motors is 1.51 times less risky than PT Puri. It trades about 0.16 of its potential returns per unit of risk. PT Puri Sentul is currently generating about -0.14 per unit of risk. If you would invest 5,096 in General Motors on September 2, 2024 and sell it today you would earn a total of 463.00 from holding General Motors or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. PT Puri Sentul
Performance |
| Timeline |
| General Motors |
| PT Puri Sentul |
GM and PT Puri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and PT Puri
The main advantage of trading using opposite GM and PT Puri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, PT Puri 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 Puri will offset losses from the drop in PT Puri's long position.The idea behind General Motors and PT Puri Sentul 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 Puri vs. PT Primadaya Plastisindo | PT Puri vs. PT Ketrosden Triasmitra | PT Puri vs. Menthobi Karyatama Raya | PT Puri vs. Jayamas Medica Industri |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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