Correlation Between GM and Putra Mandiri
Can any of the company-specific risk be diversified away by investing in both GM and Putra Mandiri 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 Putra Mandiri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Putra Mandiri Jembar, you can compare the effects of market volatilities on GM and Putra Mandiri 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 Putra Mandiri. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Putra Mandiri.
Diversification Opportunities for GM and Putra Mandiri
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Putra is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Putra Mandiri Jembar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putra Mandiri Jembar 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 Putra Mandiri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putra Mandiri Jembar has no effect on the direction of GM i.e., GM and Putra Mandiri go up and down completely randomly.
Pair Corralation between GM and Putra Mandiri
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.69 times more return on investment than Putra Mandiri. However, General Motors is 1.44 times less risky than Putra Mandiri. It trades about 0.07 of its potential returns per unit of risk. Putra Mandiri Jembar is currently generating about -0.14 per unit of risk. If you would invest 5,273 in General Motors on August 29, 2024 and sell it today you would earn a total of 206.00 from holding General Motors or generate 3.91% 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. Putra Mandiri Jembar
Performance |
| Timeline |
| General Motors |
| Putra Mandiri Jembar |
GM and Putra Mandiri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Putra Mandiri
The main advantage of trading using opposite GM and Putra Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Putra Mandiri 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 Putra Mandiri will offset losses from the drop in Putra Mandiri's long position.The idea behind General Motors and Putra Mandiri Jembar 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.| Putra Mandiri vs. Uni Charm Indonesia | Putra Mandiri vs. MNC Studios International | Putra Mandiri vs. Kencana Energi Lestari | Putra Mandiri vs. Bintang Oto Global |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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