Correlation Between GM and Dosni Roha
Can any of the company-specific risk be diversified away by investing in both GM and Dosni Roha 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 Dosni Roha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Dosni Roha Indonesia, you can compare the effects of market volatilities on GM and Dosni Roha 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 Dosni Roha. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Dosni Roha.
Diversification Opportunities for GM and Dosni Roha
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Dosni is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Dosni Roha Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dosni Roha Indonesia 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 Dosni Roha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dosni Roha Indonesia has no effect on the direction of GM i.e., GM and Dosni Roha go up and down completely randomly.
Pair Corralation between GM and Dosni Roha
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.63 times more return on investment than Dosni Roha. However, General Motors is 1.59 times less risky than Dosni Roha. It trades about 0.05 of its potential returns per unit of risk. Dosni Roha Indonesia is currently generating about -0.13 per unit of risk. If you would invest 3,334 in General Motors on December 11, 2024 and sell it today you would earn a total of 1,474 from holding General Motors or generate 44.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.52% |
| Values | Daily Returns |
General Motors vs. Dosni Roha Indonesia
Performance |
| Timeline |
| General Motors |
| Dosni Roha Indonesia |
GM and Dosni Roha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Dosni Roha
The main advantage of trading using opposite GM and Dosni Roha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Dosni Roha 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 Dosni Roha will offset losses from the drop in Dosni Roha's long position.The idea behind General Motors and Dosni Roha Indonesia 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.| Dosni Roha vs. Weha Transportasi Indonesia | ||
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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