Correlation Between GM and Prima Andalan
Can any of the company-specific risk be diversified away by investing in both GM and Prima Andalan 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 Prima Andalan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Prima Andalan Mandiri, you can compare the effects of market volatilities on GM and Prima Andalan 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 Prima Andalan. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Prima Andalan.
Diversification Opportunities for GM and Prima Andalan
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Prima is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Prima Andalan Mandiri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prima Andalan Mandiri 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 Prima Andalan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prima Andalan Mandiri has no effect on the direction of GM i.e., GM and Prima Andalan go up and down completely randomly.
Pair Corralation between GM and Prima Andalan
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.31 times more return on investment than Prima Andalan. However, GM is 1.31 times more volatile than Prima Andalan Mandiri. It trades about 0.05 of its potential returns per unit of risk. Prima Andalan Mandiri is currently generating about 0.01 per unit of risk. If you would invest 3,807 in General Motors on August 26, 2024 and sell it today you would earn a total of 2,046 from holding General Motors or generate 53.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.57% |
| Values | Daily Returns |
General Motors vs. Prima Andalan Mandiri
Performance |
| Timeline |
| General Motors |
| Prima Andalan Mandiri |
GM and Prima Andalan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Prima Andalan
The main advantage of trading using opposite GM and Prima Andalan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Prima Andalan 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 Prima Andalan will offset losses from the drop in Prima Andalan's long position.The idea behind General Motors and Prima Andalan Mandiri 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.| Prima Andalan vs. Baramulti Suksessarana Tbk | Prima Andalan vs. Mitrabara Adiperdana PT | Prima Andalan vs. Adaro Minerals Indonesia | Prima Andalan vs. RMK Energy PT |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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