Correlation Between Gunawan Dianjaya and Polychem Indonesia
Can any of the company-specific risk be diversified away by investing in both Gunawan Dianjaya and Polychem Indonesia 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 Gunawan Dianjaya and Polychem Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gunawan Dianjaya Steel and Polychem Indonesia Tbk, you can compare the effects of market volatilities on Gunawan Dianjaya and Polychem Indonesia 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 Gunawan Dianjaya with a short position of Polychem Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gunawan Dianjaya and Polychem Indonesia.
Diversification Opportunities for Gunawan Dianjaya and Polychem Indonesia
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gunawan and Polychem is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Gunawan Dianjaya Steel and Polychem Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polychem Indonesia Tbk and Gunawan Dianjaya 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 Gunawan Dianjaya Steel are associated (or correlated) with Polychem Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polychem Indonesia Tbk has no effect on the direction of Gunawan Dianjaya i.e., Gunawan Dianjaya and Polychem Indonesia go up and down completely randomly.
Pair Corralation between Gunawan Dianjaya and Polychem Indonesia
Assuming the 90 days trading horizon Gunawan Dianjaya Steel is expected to under-perform the Polychem Indonesia. In addition to that, Gunawan Dianjaya is 2.4 times more volatile than Polychem Indonesia Tbk. It trades about -0.2 of its total potential returns per unit of risk. Polychem Indonesia Tbk is currently generating about -0.13 per unit of volatility. If you would invest 10,800 in Polychem Indonesia Tbk on December 1, 2024 and sell it today you would lose (300.00) from holding Polychem Indonesia Tbk or give up 2.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gunawan Dianjaya Steel vs. Polychem Indonesia Tbk
Performance |
| Timeline |
| Gunawan Dianjaya Steel |
| Polychem Indonesia Tbk |
Gunawan Dianjaya and Polychem Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gunawan Dianjaya and Polychem Indonesia
The main advantage of trading using opposite Gunawan Dianjaya and Polychem Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gunawan Dianjaya position performs unexpectedly, Polychem Indonesia 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 Polychem Indonesia will offset losses from the drop in Polychem Indonesia's long position.| Gunawan Dianjaya vs. Betonjaya Manunggal Tbk | Gunawan Dianjaya vs. Lotte Chemical Titan | Gunawan Dianjaya vs. Indopoly Swakarsa Industry | Gunawan Dianjaya vs. Saranacentral Bajatama Tbk |
| Polychem Indonesia vs. Gajah Tunggal Tbk | Polychem Indonesia vs. Astra Graphia Tbk | Polychem Indonesia vs. Citra Marga Nusaphala | Polychem Indonesia vs. Sentul City Tbk |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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