Correlation Between GM and PT Wahana

Can any of the company-specific risk be diversified away by investing in both GM and PT Wahana 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 Wahana 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 Wahana Interfood, you can compare the effects of market volatilities on GM and PT Wahana 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 Wahana. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and PT Wahana.

Diversification Opportunities for GM and PT Wahana

-0.72

Correlation Coefficient

GM  PT Wahana

Pay attention - limited upside

The 3 months correlation between GM and COCO is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and PT Wahana Interfood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Wahana Interfood 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 Wahana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Wahana Interfood has no effect on the direction of GM i.e., GM and PT Wahana go up and down completely randomly.

Pair Corralation between GM and PT Wahana

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.47 times more return on investment than PT Wahana. However, General Motors is 2.11 times less risky than PT Wahana. It trades about 0.11 of its potential returns per unit of risk. PT Wahana Interfood is currently generating about -0.03 per unit of risk. If you would invest  2,884  in General Motors on September 17, 2024 and sell it today you would earn a total of  2,369  from holding General Motors or generate 82.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.19%
Values	Daily Returns

General Motors  vs.  PT Wahana Interfood

General Motors

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PT Wahana Interfood

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Wahana Interfood has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with GM and PT Wahana

The main advantage of trading using opposite GM and PT Wahana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, PT Wahana 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 Wahana will offset losses from the drop in PT Wahana's long position.

The idea behind General Motors and PT Wahana Interfood 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.