Correlation Between Gunawan Dianjaya and Indah Kiat
Can any of the company-specific risk be diversified away by investing in both Gunawan Dianjaya and Indah Kiat 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 Indah Kiat 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 Indah Kiat Pulp, you can compare the effects of market volatilities on Gunawan Dianjaya and Indah Kiat 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 Indah Kiat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gunawan Dianjaya and Indah Kiat.
Diversification Opportunities for Gunawan Dianjaya and Indah Kiat
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gunawan and Indah is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Gunawan Dianjaya Steel and Indah Kiat Pulp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indah Kiat Pulp 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 Indah Kiat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indah Kiat Pulp has no effect on the direction of Gunawan Dianjaya i.e., Gunawan Dianjaya and Indah Kiat go up and down completely randomly.
Pair Corralation between Gunawan Dianjaya and Indah Kiat
Assuming the 90 days trading horizon Gunawan Dianjaya Steel is expected to under-perform the Indah Kiat. In addition to that, Gunawan Dianjaya is 1.66 times more volatile than Indah Kiat Pulp. It trades about -0.02 of its total potential returns per unit of risk. Indah Kiat Pulp is currently generating about -0.02 per unit of volatility. If you would invest 962,851 in Indah Kiat Pulp on August 27, 2024 and sell it today you would lose (252,851) from holding Indah Kiat Pulp or give up 26.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Gunawan Dianjaya Steel vs. Indah Kiat Pulp
Performance |
| Timeline |
| Gunawan Dianjaya Steel |
| Indah Kiat Pulp |
Gunawan Dianjaya and Indah Kiat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gunawan Dianjaya and Indah Kiat
The main advantage of trading using opposite Gunawan Dianjaya and Indah Kiat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gunawan Dianjaya position performs unexpectedly, Indah Kiat 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 Indah Kiat will offset losses from the drop in Indah Kiat's long position.| Gunawan Dianjaya vs. Kedaung Indah Can | Gunawan Dianjaya vs. Langgeng Makmur Industri | Gunawan Dianjaya vs. Kabelindo Murni Tbk | Gunawan Dianjaya vs. Mustika Ratu Tbk |
| Indah Kiat vs. Kedaung Indah Can | Indah Kiat vs. Langgeng Makmur Industri | Indah Kiat vs. Kabelindo Murni Tbk | Indah Kiat vs. Mustika Ratu 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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