Correlation Between GM and Intanwijaya Internasional

Can any of the company-specific risk be diversified away by investing in both GM and Intanwijaya Internasional 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 Intanwijaya Internasional into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between General Motors and Intanwijaya Internasional Tbk, you can compare the effects of market volatilities on GM and Intanwijaya Internasional 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 Intanwijaya Internasional. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Intanwijaya Internasional.

Diversification Opportunities for GM and Intanwijaya Internasional

-0.1

Correlation Coefficient

GM  Intanwijaya Internasional

Good diversification

The 3 months correlation between GM and Intanwijaya is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Intanwijaya Internasional Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intanwijaya Internasional 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 Intanwijaya Internasional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intanwijaya Internasional has no effect on the direction of GM i.e., GM and Intanwijaya Internasional go up and down completely randomly.

Pair Corralation between GM and Intanwijaya Internasional

Allowing for the 90-day total investment horizon General Motors is expected to generate 1.64 times more return on investment than Intanwijaya Internasional. However, GM is 1.64 times more volatile than Intanwijaya Internasional Tbk. It trades about 0.1 of its potential returns per unit of risk. Intanwijaya Internasional Tbk is currently generating about 0.02 per unit of risk. If you would invest  4,602  in General Motors on September 12, 2024 and sell it today you would earn a total of  672.00  from holding General Motors or generate 14.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

General Motors  vs.  Intanwijaya Internasional Tbk

General Motors

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.

Intanwijaya Internasional

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intanwijaya Internasional Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Intanwijaya Internasional is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with GM and Intanwijaya Internasional

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

The idea behind General Motors and Intanwijaya Internasional Tbk 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.