Correlation Between Goodyear Indonesia and Pembangunan Graha
Can any of the company-specific risk be diversified away by investing in both Goodyear Indonesia and Pembangunan Graha 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 Goodyear Indonesia and Pembangunan Graha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goodyear Indonesia Tbk and Pembangunan Graha Lestari, you can compare the effects of market volatilities on Goodyear Indonesia and Pembangunan Graha 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 Goodyear Indonesia with a short position of Pembangunan Graha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Indonesia and Pembangunan Graha.
Diversification Opportunities for Goodyear Indonesia and Pembangunan Graha
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Goodyear and Pembangunan is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Indonesia Tbk and Pembangunan Graha Lestari in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembangunan Graha Lestari and Goodyear Indonesia 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 Goodyear Indonesia Tbk are associated (or correlated) with Pembangunan Graha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembangunan Graha Lestari has no effect on the direction of Goodyear Indonesia i.e., Goodyear Indonesia and Pembangunan Graha go up and down completely randomly.
Pair Corralation between Goodyear Indonesia and Pembangunan Graha
Assuming the 90 days trading horizon Goodyear Indonesia Tbk is expected to generate 0.5 times more return on investment than Pembangunan Graha. However, Goodyear Indonesia Tbk is 1.98 times less risky than Pembangunan Graha. It trades about 0.06 of its potential returns per unit of risk. Pembangunan Graha Lestari is currently generating about -0.07 per unit of risk. If you would invest 116,000 in Goodyear Indonesia Tbk on December 3, 2024 and sell it today you would earn a total of 3,500 from holding Goodyear Indonesia Tbk or generate 3.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goodyear Indonesia Tbk vs. Pembangunan Graha Lestari
Performance |
| Timeline |
| Goodyear Indonesia Tbk |
| Pembangunan Graha Lestari |
Goodyear Indonesia and Pembangunan Graha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Indonesia and Pembangunan Graha
The main advantage of trading using opposite Goodyear Indonesia and Pembangunan Graha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Indonesia position performs unexpectedly, Pembangunan Graha 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 Pembangunan Graha will offset losses from the drop in Pembangunan Graha's long position.| Goodyear Indonesia vs. Indo Kordsa Tbk | Goodyear Indonesia vs. Indospring Tbk | Goodyear Indonesia vs. Sepatu Bata Tbk | Goodyear Indonesia vs. Astra Otoparts Tbk |
| Pembangunan Graha vs. Red Planet Indonesia | Pembangunan Graha vs. Pudjiadi Sons Tbk | Pembangunan Graha vs. Pembangunan Jaya Ancol | Pembangunan Graha vs. Pioneerindo Gourmet International |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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