Correlation Between GM and BAKRIE SUMATERA
Can any of the company-specific risk be diversified away by investing in both GM and BAKRIE SUMATERA 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 BAKRIE SUMATERA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and BAKRIE SUMATERA PL, you can compare the effects of market volatilities on GM and BAKRIE SUMATERA 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 BAKRIE SUMATERA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and BAKRIE SUMATERA.
Diversification Opportunities for GM and BAKRIE SUMATERA
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and BAKRIE is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and BAKRIE SUMATERA PL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAKRIE SUMATERA PL 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 BAKRIE SUMATERA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAKRIE SUMATERA PL has no effect on the direction of GM i.e., GM and BAKRIE SUMATERA go up and down completely randomly.
Pair Corralation between GM and BAKRIE SUMATERA
Allowing for the 90-day total investment horizon GM is expected to generate 3.77 times less return on investment than BAKRIE SUMATERA. But when comparing it to its historical volatility, General Motors is 4.59 times less risky than BAKRIE SUMATERA. It trades about 0.08 of its potential returns per unit of risk. BAKRIE SUMATERA PL is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.90 in BAKRIE SUMATERA PL on September 3, 2024 and sell it today you would earn a total of 0.30 from holding BAKRIE SUMATERA PL or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.9% |
| Values | Daily Returns |
General Motors vs. BAKRIE SUMATERA PL
Performance |
| Timeline |
| General Motors |
| BAKRIE SUMATERA PL |
GM and BAKRIE SUMATERA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and BAKRIE SUMATERA
The main advantage of trading using opposite GM and BAKRIE SUMATERA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, BAKRIE SUMATERA 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 BAKRIE SUMATERA will offset losses from the drop in BAKRIE SUMATERA's long position.The idea behind General Motors and BAKRIE SUMATERA PL 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.| BAKRIE SUMATERA vs. Caltagirone SpA | BAKRIE SUMATERA vs. Unity Software | BAKRIE SUMATERA vs. MITSUBISHI STEEL MFG | BAKRIE SUMATERA vs. VITEC SOFTWARE GROUP |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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