Correlation Between GM and PT Perusahaan
Can any of the company-specific risk be diversified away by investing in both GM and PT Perusahaan 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 PT Perusahaan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and PT Perusahaan Gas, you can compare the effects of market volatilities on GM and PT Perusahaan 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 PT Perusahaan. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and PT Perusahaan.
Diversification Opportunities for GM and PT Perusahaan
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GM and PPAAF is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and PT Perusahaan Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Perusahaan Gas 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 PT Perusahaan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Perusahaan Gas has no effect on the direction of GM i.e., GM and PT Perusahaan go up and down completely randomly.
Pair Corralation between GM and PT Perusahaan
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.03 times more return on investment than PT Perusahaan. However, General Motors is 38.01 times less risky than PT Perusahaan. It trades about 0.05 of its potential returns per unit of risk. PT Perusahaan Gas is currently generating about -0.08 per unit of risk. If you would invest 3,805 in General Motors on September 3, 2024 and sell it today you would earn a total of 1,754 from holding General Motors or generate 46.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 32.32% |
| Values | Daily Returns |
General Motors vs. PT Perusahaan Gas
Performance |
| Timeline |
| General Motors |
| PT Perusahaan Gas |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and PT Perusahaan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and PT Perusahaan
The main advantage of trading using opposite GM and PT Perusahaan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, PT Perusahaan 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 PT Perusahaan will offset losses from the drop in PT Perusahaan's long position.| GM vs. GreenPower Motor | GM vs. ZEEKR Intelligent Technology | GM vs. Volcon Inc | GM vs. ECD Automotive Design |
| PT Perusahaan vs. ENN Energy Holdings | PT Perusahaan vs. APA Group | PT Perusahaan vs. EverGen Infrastructure Corp | PT Perusahaan vs. Beijing Gas Blue |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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