Correlation Between GM and Megapower Makmur
Can any of the company-specific risk be diversified away by investing in both GM and Megapower Makmur 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 Megapower Makmur into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Megapower Makmur TBK, you can compare the effects of market volatilities on GM and Megapower Makmur 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 Megapower Makmur. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Megapower Makmur.
Diversification Opportunities for GM and Megapower Makmur
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Megapower is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Megapower Makmur TBK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megapower Makmur TBK 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 Megapower Makmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megapower Makmur TBK has no effect on the direction of GM i.e., GM and Megapower Makmur go up and down completely randomly.
Pair Corralation between GM and Megapower Makmur
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.79 times more return on investment than Megapower Makmur. However, General Motors is 1.26 times less risky than Megapower Makmur. It trades about -0.14 of its potential returns per unit of risk. Megapower Makmur TBK is currently generating about -0.18 per unit of risk. If you would invest 5,753 in General Motors on September 12, 2024 and sell it today you would lose (479.00) from holding General Motors or give up 8.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Megapower Makmur TBK
Performance |
| Timeline |
| General Motors |
| Megapower Makmur TBK |
GM and Megapower Makmur Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Megapower Makmur
The main advantage of trading using opposite GM and Megapower Makmur positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Megapower Makmur 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 Megapower Makmur will offset losses from the drop in Megapower Makmur's long position.The idea behind General Motors and Megapower Makmur TBK 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.| Megapower Makmur vs. Terregra Asia Energy | Megapower Makmur vs. Bali Towerindo Sentra | Megapower Makmur vs. Sanurhasta Mitra PT | Megapower Makmur vs. Kencana Energi Lestari |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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