Correlation Between GM and Kirana Megatara
Can any of the company-specific risk be diversified away by investing in both GM and Kirana Megatara 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 Kirana Megatara into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Kirana Megatara Tbk, you can compare the effects of market volatilities on GM and Kirana Megatara 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 Kirana Megatara. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Kirana Megatara.
Diversification Opportunities for GM and Kirana Megatara
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Kirana is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Kirana Megatara Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirana Megatara Tbk 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 Kirana Megatara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirana Megatara Tbk has no effect on the direction of GM i.e., GM and Kirana Megatara go up and down completely randomly.
Pair Corralation between GM and Kirana Megatara
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.45 times more return on investment than Kirana Megatara. However, General Motors is 2.2 times less risky than Kirana Megatara. It trades about 0.09 of its potential returns per unit of risk. Kirana Megatara Tbk is currently generating about 0.04 per unit of risk. If you would invest 3,550 in General Motors on September 14, 2024 and sell it today you would earn a total of 1,710 from holding General Motors or generate 48.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 94.38% |
Values | Daily Returns |
General Motors vs. Kirana Megatara Tbk
Performance |
Timeline |
General Motors |
Kirana Megatara Tbk |
GM and Kirana Megatara Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and Kirana Megatara
The main advantage of trading using opposite GM and Kirana Megatara positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Kirana Megatara 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 Kirana Megatara will offset losses from the drop in Kirana Megatara's long position.The idea behind General Motors and Kirana Megatara 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.Kirana Megatara vs. Pembangunan Graha Lestari | Kirana Megatara vs. Pembangunan Jaya Ancol | Kirana Megatara vs. Hotel Sahid Jaya | Kirana Megatara vs. Mitrabara Adiperdana PT |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation |