Correlation Between GM and Akbar Indomakmur

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

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

Diversification Opportunities for GM and Akbar Indomakmur

-0.25

Correlation Coefficient

GM  Akbar Indomakmur

Very good diversification

The 3 months correlation between GM and Akbar is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Akbar Indomakmur Stimec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akbar Indomakmur Stimec 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 Akbar Indomakmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akbar Indomakmur Stimec has no effect on the direction of GM i.e., GM and Akbar Indomakmur go up and down completely randomly.

Pair Corralation between GM and Akbar Indomakmur

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.95 times more return on investment than Akbar Indomakmur. However, General Motors is 1.06 times less risky than Akbar Indomakmur. It trades about 0.06 of its potential returns per unit of risk. Akbar Indomakmur Stimec is currently generating about 0.0 per unit of risk. If you would invest  5,180  in General Motors on September 5, 2024 and sell it today you would earn a total of  156.00  from holding General Motors or generate 3.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

General Motors  vs.  Akbar Indomakmur Stimec

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 displayed solid returns over the last few months and may actually be approaching a breakup point.

Akbar Indomakmur Stimec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akbar Indomakmur Stimec has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Akbar Indomakmur 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 Akbar Indomakmur

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

The idea behind General Motors and Akbar Indomakmur Stimec 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.