Correlation Between GM and PT Charlie
Can any of the company-specific risk be diversified away by investing in both GM and PT Charlie 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 Charlie 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 Charlie Hospital, you can compare the effects of market volatilities on GM and PT Charlie 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 Charlie. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and PT Charlie.
Diversification Opportunities for GM and PT Charlie
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between GM and RSCH is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and PT Charlie Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Charlie Hospital 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 Charlie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Charlie Hospital has no effect on the direction of GM i.e., GM and PT Charlie go up and down completely randomly.
Pair Corralation between GM and PT Charlie
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.69 times more return on investment than PT Charlie. However, General Motors is 1.46 times less risky than PT Charlie. It trades about 0.28 of its potential returns per unit of risk. PT Charlie Hospital is currently generating about -0.16 per unit of risk. If you would invest 5,207 in General Motors on August 26, 2024 and sell it today you would earn a total of 646.00 from holding General Motors or generate 12.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. PT Charlie Hospital
Performance |
| Timeline |
| General Motors |
| PT Charlie Hospital |
GM and PT Charlie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and PT Charlie
The main advantage of trading using opposite GM and PT Charlie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, PT Charlie 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 Charlie will offset losses from the drop in PT Charlie's long position.The idea behind General Motors and PT Charlie Hospital 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.| PT Charlie vs. Bank Central Asia | PT Charlie vs. Bank Rakyat Indonesia | PT Charlie vs. Bayan Resources Tbk | PT Charlie vs. Bank Mandiri Persero |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |