Correlation Between GM and Lenox Pasifik
Can any of the company-specific risk be diversified away by investing in both GM and Lenox Pasifik 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 Lenox Pasifik into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Lenox Pasifik Investama, you can compare the effects of market volatilities on GM and Lenox Pasifik 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 Lenox Pasifik. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Lenox Pasifik.
Diversification Opportunities for GM and Lenox Pasifik
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Lenox is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Lenox Pasifik Investama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lenox Pasifik Investama 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 Lenox Pasifik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lenox Pasifik Investama has no effect on the direction of GM i.e., GM and Lenox Pasifik go up and down completely randomly.
Pair Corralation between GM and Lenox Pasifik
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.55 times more return on investment than Lenox Pasifik. However, General Motors is 1.81 times less risky than Lenox Pasifik. It trades about 0.07 of its potential returns per unit of risk. Lenox Pasifik Investama is currently generating about 0.01 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 Together |
| Strength | Weak |
| Accuracy | 95.48% |
| Values | Daily Returns |
General Motors vs. Lenox Pasifik Investama
Performance |
| Timeline |
| General Motors |
| Lenox Pasifik Investama |
GM and Lenox Pasifik Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Lenox Pasifik
The main advantage of trading using opposite GM and Lenox Pasifik positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Lenox Pasifik 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 Lenox Pasifik will offset losses from the drop in Lenox Pasifik's long position.The idea behind General Motors and Lenox Pasifik Investama 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.| Lenox Pasifik vs. Star Pacific Tbk | Lenox Pasifik vs. Multipolar Tbk | Lenox Pasifik vs. Lippo General Insurance | Lenox Pasifik vs. Paninvest 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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