Correlation Between Gudang Garam and Fortune Indonesia
Can any of the company-specific risk be diversified away by investing in both Gudang Garam and Fortune Indonesia 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 Fortune Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gudang Garam Tbk and Fortune Indonesia Tbk, you can compare the effects of market volatilities on Gudang Garam and Fortune Indonesia 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 Fortune Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gudang Garam and Fortune Indonesia.
Diversification Opportunities for Gudang Garam and Fortune Indonesia
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Gudang and Fortune is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Gudang Garam Tbk and Fortune Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Indonesia Tbk 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 Tbk are associated (or correlated) with Fortune Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Indonesia Tbk has no effect on the direction of Gudang Garam i.e., Gudang Garam and Fortune Indonesia go up and down completely randomly.
Pair Corralation between Gudang Garam and Fortune Indonesia
Assuming the 90 days trading horizon Gudang Garam Tbk is expected to under-perform the Fortune Indonesia. But the stock apears to be less risky and, when comparing its historical volatility, Gudang Garam Tbk is 4.68 times less risky than Fortune Indonesia. The stock trades about -0.14 of its potential returns per unit of risk. The Fortune Indonesia Tbk is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 16,000 in Fortune Indonesia Tbk on September 1, 2024 and sell it today you would earn a total of 449,000 from holding Fortune Indonesia Tbk or generate 2806.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.61% |
| Values | Daily Returns |
Gudang Garam Tbk vs. Fortune Indonesia Tbk
Performance |
| Timeline |
| Gudang Garam Tbk |
| Fortune Indonesia Tbk |
Gudang Garam and Fortune Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gudang Garam and Fortune Indonesia
The main advantage of trading using opposite Gudang Garam and Fortune Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gudang Garam position performs unexpectedly, Fortune Indonesia 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 Fortune Indonesia will offset losses from the drop in Fortune Indonesia's long position.| Gudang Garam vs. Hanjaya Mandala Sampoerna | Gudang Garam vs. Unilever Indonesia Tbk | Gudang Garam vs. PT Indofood Sukses | Gudang Garam vs. United Tractors Tbk |
| Fortune Indonesia vs. Indosat Tbk | Fortune Indonesia vs. XL Axiata Tbk | Fortune Indonesia vs. Energi Mega Persada | Fortune Indonesia vs. Bakrie Brothers Tbk |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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