Correlation Between GM and Midi Utama
Can any of the company-specific risk be diversified away by investing in both GM and Midi Utama 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 Midi Utama into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Midi Utama Indonesia, you can compare the effects of market volatilities on GM and Midi Utama 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 Midi Utama. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Midi Utama.
Diversification Opportunities for GM and Midi Utama
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Midi is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Midi Utama Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midi Utama Indonesia 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 Midi Utama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midi Utama Indonesia has no effect on the direction of GM i.e., GM and Midi Utama go up and down completely randomly.
Pair Corralation between GM and Midi Utama
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.95 times more return on investment than Midi Utama. However, GM is 1.95 times more volatile than Midi Utama Indonesia. It trades about 0.14 of its potential returns per unit of risk. Midi Utama Indonesia is currently generating about -0.35 per unit of risk. If you would invest 5,180 in General Motors on September 3, 2024 and sell it today you would earn a total of 379.00 from holding General Motors or generate 7.32% 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. Midi Utama Indonesia
Performance |
| Timeline |
| General Motors |
| Midi Utama Indonesia |
GM and Midi Utama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Midi Utama
The main advantage of trading using opposite GM and Midi Utama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Midi Utama 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 Midi Utama will offset losses from the drop in Midi Utama's long position.The idea behind General Motors and Midi Utama Indonesia 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.| Midi Utama vs. Sumber Alfaria Trijaya | Midi Utama vs. Hero Supermarket Tbk | Midi Utama vs. Supra Boga Lestari | Midi Utama vs. Multi Indocitra 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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