Correlation Between Gudang Garam and Salim Ivomas
Can any of the company-specific risk be diversified away by investing in both Gudang Garam and Salim Ivomas 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 Salim Ivomas 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 Salim Ivomas Pratama, you can compare the effects of market volatilities on Gudang Garam and Salim Ivomas 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 Salim Ivomas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gudang Garam and Salim Ivomas.
Diversification Opportunities for Gudang Garam and Salim Ivomas
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gudang and Salim is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Gudang Garam Tbk and Salim Ivomas Pratama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salim Ivomas Pratama 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 Salim Ivomas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salim Ivomas Pratama has no effect on the direction of Gudang Garam i.e., Gudang Garam and Salim Ivomas go up and down completely randomly.
Pair Corralation between Gudang Garam and Salim Ivomas
Assuming the 90 days trading horizon Gudang Garam Tbk is expected to under-perform the Salim Ivomas. In addition to that, Gudang Garam is 1.22 times more volatile than Salim Ivomas Pratama. It trades about -0.16 of its total potential returns per unit of risk. Salim Ivomas Pratama is currently generating about 0.03 per unit of volatility. If you would invest 35,222 in Salim Ivomas Pratama on November 5, 2024 and sell it today you would earn a total of 2,778 from holding Salim Ivomas Pratama or generate 7.89% 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. Salim Ivomas Pratama
Performance |
| Timeline |
| Gudang Garam Tbk |
| Salim Ivomas Pratama |
Gudang Garam and Salim Ivomas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gudang Garam and Salim Ivomas
The main advantage of trading using opposite Gudang Garam and Salim Ivomas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gudang Garam position performs unexpectedly, Salim Ivomas 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 Salim Ivomas will offset losses from the drop in Salim Ivomas' 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 |
| Salim Ivomas vs. Perusahaan Perkebunan London | Salim Ivomas vs. Eagle High Plantations | Salim Ivomas vs. Surya Semesta Internusa | Salim Ivomas vs. Harum Energy 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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