Correlation Between GUDANG GARAM and NITTO DENKO
Can any of the company-specific risk be diversified away by investing in both GUDANG GARAM and NITTO DENKO 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 NITTO DENKO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GUDANG GARAM and NITTO DENKO P, you can compare the effects of market volatilities on GUDANG GARAM and NITTO DENKO 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 NITTO DENKO. Check out your portfolio center. Please also check ongoing floating volatility patterns of GUDANG GARAM and NITTO DENKO.
Diversification Opportunities for GUDANG GARAM and NITTO DENKO
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GUDANG and NITTO is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding GUDANG GARAM and NITTO DENKO P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NITTO DENKO P 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 NITTO DENKO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NITTO DENKO P has no effect on the direction of GUDANG GARAM i.e., GUDANG GARAM and NITTO DENKO go up and down completely randomly.
Pair Corralation between GUDANG GARAM and NITTO DENKO
Assuming the 90 days trading horizon GUDANG GARAM is expected to under-perform the NITTO DENKO. But the stock apears to be less risky and, when comparing its historical volatility, GUDANG GARAM is 1.23 times less risky than NITTO DENKO. The stock trades about -0.61 of its potential returns per unit of risk. The NITTO DENKO P is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,620 in NITTO DENKO P on October 29, 2024 and sell it today you would earn a total of 80.00 from holding NITTO DENKO P or generate 4.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GUDANG GARAM vs. NITTO DENKO P
Performance |
| Timeline |
| GUDANG GARAM |
| NITTO DENKO P |
GUDANG GARAM and NITTO DENKO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GUDANG GARAM and NITTO DENKO
The main advantage of trading using opposite GUDANG GARAM and NITTO DENKO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GUDANG GARAM position performs unexpectedly, NITTO DENKO 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 NITTO DENKO will offset losses from the drop in NITTO DENKO's long position.| GUDANG GARAM vs. Apple Inc | GUDANG GARAM vs. Apple Inc | GUDANG GARAM vs. Apple Inc | GUDANG GARAM vs. Apple Inc |
| NITTO DENKO vs. GEAR4MUSIC LS 10 | NITTO DENKO vs. Highlight Communications AG | NITTO DENKO vs. Entravision Communications | NITTO DENKO vs. Warner Music Group |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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