Correlation Between Gunawan Dianjaya and Lotte Chemical
Can any of the company-specific risk be diversified away by investing in both Gunawan Dianjaya and Lotte Chemical 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 Lotte Chemical 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 Lotte Chemical Titan, you can compare the effects of market volatilities on Gunawan Dianjaya and Lotte Chemical 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 Lotte Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gunawan Dianjaya and Lotte Chemical.
Diversification Opportunities for Gunawan Dianjaya and Lotte Chemical
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gunawan and Lotte is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Gunawan Dianjaya Steel and Lotte Chemical Titan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Chemical Titan 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 Lotte Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Chemical Titan has no effect on the direction of Gunawan Dianjaya i.e., Gunawan Dianjaya and Lotte Chemical go up and down completely randomly.
Pair Corralation between Gunawan Dianjaya and Lotte Chemical
Assuming the 90 days trading horizon Gunawan Dianjaya is expected to generate 1.9 times less return on investment than Lotte Chemical. In addition to that, Gunawan Dianjaya is 1.13 times more volatile than Lotte Chemical Titan. It trades about 0.03 of its total potential returns per unit of risk. Lotte Chemical Titan is currently generating about 0.05 per unit of volatility. If you would invest 17,000 in Lotte Chemical Titan on August 24, 2024 and sell it today you would earn a total of 2,600 from holding Lotte Chemical Titan or generate 15.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gunawan Dianjaya Steel vs. Lotte Chemical Titan
Performance |
| Timeline |
| Gunawan Dianjaya Steel |
| Lotte Chemical Titan |
Gunawan Dianjaya and Lotte Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gunawan Dianjaya and Lotte Chemical
The main advantage of trading using opposite Gunawan Dianjaya and Lotte Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gunawan Dianjaya position performs unexpectedly, Lotte Chemical 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 Lotte Chemical will offset losses from the drop in Lotte Chemical's long position.| Gunawan Dianjaya vs. Kedaung Indah Can | Gunawan Dianjaya vs. Langgeng Makmur Industri | Gunawan Dianjaya vs. Kabelindo Murni Tbk | Gunawan Dianjaya vs. Champion Pacific Indonesia |
| Lotte Chemical vs. Champion Pacific Indonesia | Lotte Chemical vs. Argha Karya Prima | Lotte Chemical vs. Asiaplast Industries Tbk | Lotte Chemical vs. Intanwijaya Internasional 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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