Correlation Between GUDANG GARAM and Hapag Lloyd

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Can any of the company-specific risk be diversified away by investing in both GUDANG GARAM and Hapag Lloyd 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 Hapag Lloyd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GUDANG GARAM and Hapag Lloyd AG, you can compare the effects of market volatilities on GUDANG GARAM and Hapag Lloyd 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 Hapag Lloyd. Check out your portfolio center. Please also check ongoing floating volatility patterns of GUDANG GARAM and Hapag Lloyd.

Diversification Opportunities for GUDANG GARAM and Hapag Lloyd

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between GUDANG and Hapag is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding GUDANG GARAM and Hapag Lloyd AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hapag Lloyd AG 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 Hapag Lloyd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hapag Lloyd AG has no effect on the direction of GUDANG GARAM i.e., GUDANG GARAM and Hapag Lloyd go up and down completely randomly.

Pair Corralation between GUDANG GARAM and Hapag Lloyd

Assuming the 90 days trading horizon GUDANG GARAM is expected to generate 0.41 times more return on investment than Hapag Lloyd. However, GUDANG GARAM is 2.41 times less risky than Hapag Lloyd. It trades about -0.13 of its potential returns per unit of risk. Hapag Lloyd AG is currently generating about -0.14 per unit of risk. If you would invest  74.00  in GUDANG GARAM on September 4, 2024 and sell it today you would lose (3.00) from holding GUDANG GARAM or give up 4.05% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

GUDANG GARAM  vs.  Hapag Lloyd AG

 Performance 
       Timeline  
GUDANG GARAM 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GUDANG GARAM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Hapag Lloyd AG 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Hapag Lloyd AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Hapag Lloyd may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GUDANG GARAM and Hapag Lloyd Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GUDANG GARAM and Hapag Lloyd

The main advantage of trading using opposite GUDANG GARAM and Hapag Lloyd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GUDANG GARAM position performs unexpectedly, Hapag Lloyd 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 Hapag Lloyd will offset losses from the drop in Hapag Lloyd's long position.
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The idea behind GUDANG GARAM and Hapag Lloyd AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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