Correlation Between GM and Bank Windu
Can any of the company-specific risk be diversified away by investing in both GM and Bank Windu 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 Bank Windu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Bank Windu Kentjana, you can compare the effects of market volatilities on GM and Bank Windu 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 Bank Windu. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Bank Windu.
Diversification Opportunities for GM and Bank Windu
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Bank is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Bank Windu Kentjana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Windu Kentjana 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 Bank Windu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Windu Kentjana has no effect on the direction of GM i.e., GM and Bank Windu go up and down completely randomly.
Pair Corralation between GM and Bank Windu
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.16 times more return on investment than Bank Windu. However, GM is 1.16 times more volatile than Bank Windu Kentjana. It trades about 0.08 of its potential returns per unit of risk. Bank Windu Kentjana is currently generating about 0.08 per unit of risk. If you would invest 4,551 in General Motors on August 31, 2024 and sell it today you would earn a total of 1,008 from holding General Motors or generate 22.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
General Motors vs. Bank Windu Kentjana
Performance |
| Timeline |
| General Motors |
| Bank Windu Kentjana |
GM and Bank Windu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Bank Windu
The main advantage of trading using opposite GM and Bank Windu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Bank Windu 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 Bank Windu will offset losses from the drop in Bank Windu's long position.The idea behind General Motors and Bank Windu Kentjana 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.| Bank Windu vs. Bank Mayapada Internasional | Bank Windu vs. Bank Artha Graha | Bank Windu vs. Bank Pembangunan Daerah | Bank Windu vs. Bank Mega 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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