Correlation Between FAST RETAIL and PT Gudang
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL 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 FAST RETAIL and PT Gudang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAST RETAIL ADR and PT Gudang Garam, you can compare the effects of market volatilities on FAST RETAIL 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 FAST RETAIL with a short position of PT Gudang. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and PT Gudang.
Diversification Opportunities for FAST RETAIL and PT Gudang
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between FAST and GGG is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR 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 FAST RETAIL 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 FAST RETAIL ADR 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 FAST RETAIL i.e., FAST RETAIL and PT Gudang go up and down completely randomly.
Pair Corralation between FAST RETAIL and PT Gudang
Assuming the 90 days trading horizon FAST RETAIL ADR is expected to generate 0.39 times more return on investment than PT Gudang. However, FAST RETAIL ADR is 2.57 times less risky than PT Gudang. It trades about 0.07 of its potential returns per unit of risk. PT Gudang Garam is currently generating about 0.01 per unit of risk. If you would invest 1,797 in FAST RETAIL ADR on September 13, 2024 and sell it today you would earn a total of 1,523 from holding FAST RETAIL ADR or generate 84.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAST RETAIL ADR vs. PT Gudang Garam
Performance |
| Timeline |
| FAST RETAIL ADR |
| PT Gudang Garam |
FAST RETAIL and PT Gudang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and PT Gudang
The main advantage of trading using opposite FAST RETAIL and PT Gudang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL 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.| FAST RETAIL vs. CCC SA | FAST RETAIL vs. AOYAMA TRADING | FAST RETAIL vs. Superior Plus Corp | FAST RETAIL vs. SIVERS SEMICONDUCTORS AB |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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