Correlation Between Chiba Bank and PT Gudang
Can any of the company-specific risk be diversified away by investing in both Chiba Bank and PT Gudang 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 Chiba Bank and PT Gudang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chiba Bank and PT Gudang Garam, you can compare the effects of market volatilities on Chiba Bank and PT Gudang 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 Chiba Bank with a short position of PT Gudang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chiba Bank and PT Gudang.
Diversification Opportunities for Chiba Bank and PT Gudang
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chiba and GGG is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Chiba Bank and PT Gudang Garam in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Gudang Garam and Chiba Bank 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 Chiba Bank are associated (or correlated) with PT Gudang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Gudang Garam has no effect on the direction of Chiba Bank i.e., Chiba Bank and PT Gudang go up and down completely randomly.
Pair Corralation between Chiba Bank and PT Gudang
Assuming the 90 days horizon Chiba Bank is expected to generate 0.38 times more return on investment than PT Gudang. However, Chiba Bank is 2.62 times less risky than PT Gudang. It trades about 0.26 of its potential returns per unit of risk. PT Gudang Garam is currently generating about -0.04 per unit of risk. If you would invest 670.00 in Chiba Bank on September 1, 2024 and sell it today you would earn a total of 75.00 from holding Chiba Bank or generate 11.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Chiba Bank vs. PT Gudang Garam
Performance |
| Timeline |
| Chiba Bank |
| PT Gudang Garam |
Chiba Bank and PT Gudang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chiba Bank and PT Gudang
The main advantage of trading using opposite Chiba Bank and PT Gudang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chiba Bank position performs unexpectedly, PT Gudang 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 Gudang will offset losses from the drop in PT Gudang's long position.| Chiba Bank vs. Materialise NV | Chiba Bank vs. Applied Materials | Chiba Bank vs. Martin Marietta Materials | Chiba Bank vs. THRACE PLASTICS |
| PT Gudang vs. Chiba Bank | PT Gudang vs. Heartland Financial USA | PT Gudang vs. Pebblebrook Hotel Trust | PT Gudang vs. Playa Hotels Resorts |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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