Correlation Between Gunawan Dianjaya and Pabrik Kertas
Can any of the company-specific risk be diversified away by investing in both Gunawan Dianjaya and Pabrik Kertas 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 Pabrik Kertas 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 Pabrik Kertas Tjiwi, you can compare the effects of market volatilities on Gunawan Dianjaya and Pabrik Kertas 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 Pabrik Kertas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gunawan Dianjaya and Pabrik Kertas.
Diversification Opportunities for Gunawan Dianjaya and Pabrik Kertas
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gunawan and Pabrik is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Gunawan Dianjaya Steel and Pabrik Kertas Tjiwi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pabrik Kertas Tjiwi 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 Pabrik Kertas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pabrik Kertas Tjiwi has no effect on the direction of Gunawan Dianjaya i.e., Gunawan Dianjaya and Pabrik Kertas go up and down completely randomly.
Pair Corralation between Gunawan Dianjaya and Pabrik Kertas
Assuming the 90 days trading horizon Gunawan Dianjaya Steel is expected to under-perform the Pabrik Kertas. In addition to that, Gunawan Dianjaya is 1.59 times more volatile than Pabrik Kertas Tjiwi. It trades about -0.02 of its total potential returns per unit of risk. Pabrik Kertas Tjiwi is currently generating about -0.01 per unit of volatility. If you would invest 789,234 in Pabrik Kertas Tjiwi on August 27, 2024 and sell it today you would lose (166,734) from holding Pabrik Kertas Tjiwi or give up 21.13% 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. Pabrik Kertas Tjiwi
Performance |
| Timeline |
| Gunawan Dianjaya Steel |
| Pabrik Kertas Tjiwi |
Gunawan Dianjaya and Pabrik Kertas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gunawan Dianjaya and Pabrik Kertas
The main advantage of trading using opposite Gunawan Dianjaya and Pabrik Kertas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gunawan Dianjaya position performs unexpectedly, Pabrik Kertas 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 Pabrik Kertas will offset losses from the drop in Pabrik Kertas' 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 |
| Pabrik Kertas vs. Indah Kiat Pulp | Pabrik Kertas vs. Indocement Tunggal Prakarsa | Pabrik Kertas vs. Barito Pacific Tbk | Pabrik Kertas vs. Charoen Pokphand Indonesia |
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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