Correlation Between Gudang Garam and Indosat Tbk
Can any of the company-specific risk be diversified away by investing in both Gudang Garam and Indosat Tbk 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 Indosat Tbk 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 Indosat Tbk, you can compare the effects of market volatilities on Gudang Garam and Indosat Tbk 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 Indosat Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gudang Garam and Indosat Tbk.
Diversification Opportunities for Gudang Garam and Indosat Tbk
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gudang and Indosat is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Gudang Garam Tbk and Indosat Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indosat 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 Indosat Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indosat Tbk has no effect on the direction of Gudang Garam i.e., Gudang Garam and Indosat Tbk go up and down completely randomly.
Pair Corralation between Gudang Garam and Indosat Tbk
Assuming the 90 days trading horizon Gudang Garam Tbk is expected to under-perform the Indosat Tbk. But the stock apears to be less risky and, when comparing its historical volatility, Gudang Garam Tbk is 2.7 times less risky than Indosat Tbk. The stock trades about -0.24 of its potential returns per unit of risk. The Indosat Tbk is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 243,000 in Indosat Tbk on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Indosat Tbk or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gudang Garam Tbk vs. Indosat Tbk
Performance |
| Timeline |
| Gudang Garam Tbk |
| Indosat Tbk |
Gudang Garam and Indosat Tbk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gudang Garam and Indosat Tbk
The main advantage of trading using opposite Gudang Garam and Indosat Tbk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gudang Garam position performs unexpectedly, Indosat Tbk 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 Indosat Tbk will offset losses from the drop in Indosat Tbk'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 |
| Indosat Tbk vs. Astra Agro Lestari | Indosat Tbk vs. Vale Indonesia Tbk | Indosat Tbk vs. Timah Persero Tbk | Indosat Tbk vs. Medco Energi Internasional |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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