Correlation Between GM and Wismilak Inti
Can any of the company-specific risk be diversified away by investing in both GM and Wismilak Inti 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 Wismilak Inti into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Wismilak Inti Makmur, you can compare the effects of market volatilities on GM and Wismilak Inti 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 Wismilak Inti. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Wismilak Inti.
Diversification Opportunities for GM and Wismilak Inti
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Wismilak is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Wismilak Inti Makmur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wismilak Inti Makmur 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 Wismilak Inti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wismilak Inti Makmur has no effect on the direction of GM i.e., GM and Wismilak Inti go up and down completely randomly.
Pair Corralation between GM and Wismilak Inti
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.56 times more return on investment than Wismilak Inti. However, General Motors is 1.8 times less risky than Wismilak Inti. It trades about 0.07 of its potential returns per unit of risk. Wismilak Inti Makmur is currently generating about -0.01 per unit of risk. If you would invest 3,536 in General Motors on August 31, 2024 and sell it today you would earn a total of 2,023 from holding General Motors or generate 57.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Wismilak Inti Makmur
Performance |
| Timeline |
| General Motors |
| Wismilak Inti Makmur |
GM and Wismilak Inti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Wismilak Inti
The main advantage of trading using opposite GM and Wismilak Inti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Wismilak Inti 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 Wismilak Inti will offset losses from the drop in Wismilak Inti's long position.The idea behind General Motors and Wismilak Inti Makmur 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.| Wismilak Inti vs. Bekasi Fajar Industrial | Wismilak Inti vs. Erajaya Swasembada Tbk | Wismilak Inti vs. Semen Baturaja Persero | Wismilak Inti vs. Ultra Jaya Milk |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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