Correlation Between GUDANG GARAM and BP PLC
Can any of the company-specific risk be diversified away by investing in both GUDANG GARAM and BP PLC 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 GUDANG GARAM and BP PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GUDANG GARAM and BP PLC DZ1, you can compare the effects of market volatilities on GUDANG GARAM and BP PLC 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 GUDANG GARAM with a short position of BP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of GUDANG GARAM and BP PLC.
Diversification Opportunities for GUDANG GARAM and BP PLC
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GUDANG and BPE is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding GUDANG GARAM and BP PLC DZ1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP PLC DZ1 and GUDANG GARAM 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 GUDANG GARAM are associated (or correlated) with BP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP PLC DZ1 has no effect on the direction of GUDANG GARAM i.e., GUDANG GARAM and BP PLC go up and down completely randomly.
Pair Corralation between GUDANG GARAM and BP PLC
Assuming the 90 days trading horizon GUDANG GARAM is expected to under-perform the BP PLC. In addition to that, GUDANG GARAM is 1.32 times more volatile than BP PLC DZ1. It trades about -0.02 of its total potential returns per unit of risk. BP PLC DZ1 is currently generating about -0.02 per unit of volatility. If you would invest 542.00 in BP PLC DZ1 on September 3, 2024 and sell it today you would lose (111.00) from holding BP PLC DZ1 or give up 20.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GUDANG GARAM vs. BP PLC DZ1
Performance |
| Timeline |
| GUDANG GARAM |
| BP PLC DZ1 |
GUDANG GARAM and BP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GUDANG GARAM and BP PLC
The main advantage of trading using opposite GUDANG GARAM and BP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GUDANG GARAM position performs unexpectedly, BP PLC 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 BP PLC will offset losses from the drop in BP PLC's long position.| GUDANG GARAM vs. Thai Beverage Public | GUDANG GARAM vs. Cal Maine Foods | GUDANG GARAM vs. Harmony Gold Mining | GUDANG GARAM vs. GALENA MINING LTD |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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