Correlation Between GUDANG GARAM and Goodyear Tire
Can any of the company-specific risk be diversified away by investing in both GUDANG GARAM and Goodyear Tire 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 Goodyear Tire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GUDANG GARAM and The Goodyear Tire, you can compare the effects of market volatilities on GUDANG GARAM and Goodyear Tire 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 Goodyear Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of GUDANG GARAM and Goodyear Tire.
Diversification Opportunities for GUDANG GARAM and Goodyear Tire
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GUDANG and Goodyear is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding GUDANG GARAM and The Goodyear Tire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodyear Tire 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 Goodyear Tire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodyear Tire has no effect on the direction of GUDANG GARAM i.e., GUDANG GARAM and Goodyear Tire go up and down completely randomly.
Pair Corralation between GUDANG GARAM and Goodyear Tire
Assuming the 90 days trading horizon GUDANG GARAM is expected to under-perform the Goodyear Tire. But the stock apears to be less risky and, when comparing its historical volatility, GUDANG GARAM is 1.85 times less risky than Goodyear Tire. The stock trades about -0.24 of its potential returns per unit of risk. The The Goodyear Tire is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 792.00 in The Goodyear Tire on October 20, 2024 and sell it today you would earn a total of 115.00 from holding The Goodyear Tire or generate 14.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GUDANG GARAM vs. The Goodyear Tire
Performance |
| Timeline |
| GUDANG GARAM |
| Goodyear Tire |
GUDANG GARAM and Goodyear Tire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GUDANG GARAM and Goodyear Tire
The main advantage of trading using opposite GUDANG GARAM and Goodyear Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GUDANG GARAM position performs unexpectedly, Goodyear Tire 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 Goodyear Tire will offset losses from the drop in Goodyear Tire's long position.| GUDANG GARAM vs. Apple Inc | GUDANG GARAM vs. Apple Inc | GUDANG GARAM vs. Apple Inc | GUDANG GARAM vs. Apple Inc |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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