Correlation Between GM and Unggul Indah
Can any of the company-specific risk be diversified away by investing in both GM and Unggul Indah 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 Unggul Indah into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Unggul Indah Cahaya, you can compare the effects of market volatilities on GM and Unggul Indah 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 Unggul Indah. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Unggul Indah.
Diversification Opportunities for GM and Unggul Indah
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Unggul is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Unggul Indah Cahaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unggul Indah Cahaya 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 Unggul Indah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unggul Indah Cahaya has no effect on the direction of GM i.e., GM and Unggul Indah go up and down completely randomly.
Pair Corralation between GM and Unggul Indah
Allowing for the 90-day total investment horizon General Motors is expected to generate 6.17 times more return on investment than Unggul Indah. However, GM is 6.17 times more volatile than Unggul Indah Cahaya. It trades about 0.07 of its potential returns per unit of risk. Unggul Indah Cahaya is currently generating about -0.3 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Unggul Indah Cahaya
Performance |
| Timeline |
| General Motors |
| Unggul Indah Cahaya |
GM and Unggul Indah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Unggul Indah
The main advantage of trading using opposite GM and Unggul Indah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Unggul Indah 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 Unggul Indah will offset losses from the drop in Unggul Indah's long position.The idea behind General Motors and Unggul Indah Cahaya 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.| Unggul Indah vs. Kedaung Indah Can | Unggul Indah vs. Langgeng Makmur Industri | Unggul Indah vs. Kabelindo Murni Tbk | Unggul Indah vs. Mustika Ratu Tbk |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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