Correlation Between GUDANG GARAM and EDISON INTL
Can any of the company-specific risk be diversified away by investing in both GUDANG GARAM and EDISON INTL 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 EDISON INTL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GUDANG GARAM and EDISON INTL, you can compare the effects of market volatilities on GUDANG GARAM and EDISON INTL 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 EDISON INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of GUDANG GARAM and EDISON INTL.
Diversification Opportunities for GUDANG GARAM and EDISON INTL
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GUDANG and EDISON is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding GUDANG GARAM and EDISON INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDISON INTL 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 EDISON INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDISON INTL has no effect on the direction of GUDANG GARAM i.e., GUDANG GARAM and EDISON INTL go up and down completely randomly.
Pair Corralation between GUDANG GARAM and EDISON INTL
Assuming the 90 days trading horizon GUDANG GARAM is expected to under-perform the EDISON INTL. In addition to that, GUDANG GARAM is 1.42 times more volatile than EDISON INTL. It trades about -0.16 of its total potential returns per unit of risk. EDISON INTL is currently generating about 0.0 per unit of volatility. If you would invest 5,728 in EDISON INTL on November 9, 2024 and sell it today you would lose (708.00) from holding EDISON INTL or give up 12.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 19.92% |
| Values | Daily Returns |
GUDANG GARAM vs. EDISON INTL
Performance |
| Timeline |
| GUDANG GARAM |
| EDISON INTL |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
GUDANG GARAM and EDISON INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GUDANG GARAM and EDISON INTL
The main advantage of trading using opposite GUDANG GARAM and EDISON INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GUDANG GARAM position performs unexpectedly, EDISON INTL 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 EDISON INTL will offset losses from the drop in EDISON INTL's long position.| GUDANG GARAM vs. China Railway Construction | GUDANG GARAM vs. AUST AGRICULTURAL | GUDANG GARAM vs. Hanison Construction Holdings | GUDANG GARAM vs. DAIRY FARM INTL |
| EDISON INTL vs. Moneysupermarket Group PLC | EDISON INTL vs. RCS MediaGroup SpA | EDISON INTL vs. Cal Maine Foods | EDISON INTL vs. PENN Entertainment |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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