Correlation Between GM and Siantar Top

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

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

Diversification Opportunities for GM and Siantar Top

0.38

Correlation Coefficient

GM  Siantar Top

Weak diversification

The 3 months correlation between GM and Siantar is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Siantar Top Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siantar Top 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 Siantar Top. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siantar Top Tbk has no effect on the direction of GM i.e., GM and Siantar Top go up and down completely randomly.

Pair Corralation between GM and Siantar Top

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.75 times more return on investment than Siantar Top. However, General Motors is 1.33 times less risky than Siantar Top. It trades about -0.06 of its potential returns per unit of risk. Siantar Top Tbk is currently generating about -0.08 per unit of risk. If you would invest  5,352  in General Motors on December 28, 2024 and sell it today you would lose (632.00) from holding General Motors or give up 11.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

General Motors  vs.  Siantar Top Tbk

General Motors

Risk-Adjusted Performance

Very Weak

Over the last 90 days General Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Siantar Top Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Siantar Top Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with GM and Siantar Top

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

The idea behind General Motors and Siantar Top 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.