Correlation Between Gudang Garam and Megapower Makmur
Can any of the company-specific risk be diversified away by investing in both Gudang Garam and Megapower Makmur 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 Megapower Makmur 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 Megapower Makmur TBK, you can compare the effects of market volatilities on Gudang Garam and Megapower Makmur 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 Megapower Makmur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gudang Garam and Megapower Makmur.
Diversification Opportunities for Gudang Garam and Megapower Makmur
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Gudang and Megapower is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Gudang Garam Tbk and Megapower Makmur TBK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megapower Makmur 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 Megapower Makmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megapower Makmur TBK has no effect on the direction of Gudang Garam i.e., Gudang Garam and Megapower Makmur go up and down completely randomly.
Pair Corralation between Gudang Garam and Megapower Makmur
Assuming the 90 days trading horizon Gudang Garam Tbk is expected to generate 0.59 times more return on investment than Megapower Makmur. However, Gudang Garam Tbk is 1.69 times less risky than Megapower Makmur. It trades about 0.14 of its potential returns per unit of risk. Megapower Makmur TBK is currently generating about -0.18 per unit of risk. If you would invest 1,322,500 in Gudang Garam Tbk on September 12, 2024 and sell it today you would earn a total of 67,500 from holding Gudang Garam Tbk or generate 5.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Gudang Garam Tbk vs. Megapower Makmur TBK
Performance |
| Timeline |
| Gudang Garam Tbk |
| Megapower Makmur TBK |
Gudang Garam and Megapower Makmur Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gudang Garam and Megapower Makmur
The main advantage of trading using opposite Gudang Garam and Megapower Makmur positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gudang Garam position performs unexpectedly, Megapower Makmur 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 Megapower Makmur will offset losses from the drop in Megapower Makmur's long position.| Gudang Garam vs. Austindo Nusantara Jaya | Gudang Garam vs. Garudafood Putra Putri | Gudang Garam vs. Provident Agro Tbk | Gudang Garam vs. Dharma Satya Nusantara |
| Megapower Makmur vs. Terregra Asia Energy | Megapower Makmur vs. Bali Towerindo Sentra | Megapower Makmur vs. Sanurhasta Mitra PT | Megapower Makmur vs. Kencana Energi Lestari |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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