Correlation Between PT Gajah and Nokian Renkaat
Can any of the company-specific risk be diversified away by investing in both PT Gajah and Nokian Renkaat 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 PT Gajah and Nokian Renkaat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Gajah Tunggal and Nokian Renkaat Oyj, you can compare the effects of market volatilities on PT Gajah and Nokian Renkaat 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 PT Gajah with a short position of Nokian Renkaat. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Gajah and Nokian Renkaat.
Diversification Opportunities for PT Gajah and Nokian Renkaat
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GH8 and Nokian is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding PT Gajah Tunggal and Nokian Renkaat Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokian Renkaat Oyj and PT Gajah 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 PT Gajah Tunggal are associated (or correlated) with Nokian Renkaat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokian Renkaat Oyj has no effect on the direction of PT Gajah i.e., PT Gajah and Nokian Renkaat go up and down completely randomly.
Pair Corralation between PT Gajah and Nokian Renkaat
Assuming the 90 days horizon PT Gajah Tunggal is expected to under-perform the Nokian Renkaat. In addition to that, PT Gajah is 6.16 times more volatile than Nokian Renkaat Oyj. It trades about -0.03 of its total potential returns per unit of risk. Nokian Renkaat Oyj is currently generating about -0.16 per unit of volatility. If you would invest 788.00 in Nokian Renkaat Oyj on September 1, 2024 and sell it today you would lose (55.00) from holding Nokian Renkaat Oyj or give up 6.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Gajah Tunggal vs. Nokian Renkaat Oyj
Performance |
| Timeline |
| PT Gajah Tunggal |
| Nokian Renkaat Oyj |
PT Gajah and Nokian Renkaat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Gajah and Nokian Renkaat
The main advantage of trading using opposite PT Gajah and Nokian Renkaat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Gajah position performs unexpectedly, Nokian Renkaat 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 Nokian Renkaat will offset losses from the drop in Nokian Renkaat's long position.| PT Gajah vs. SCANSOURCE | PT Gajah vs. RETAIL FOOD GROUP | PT Gajah vs. AUTO TRADER ADR | PT Gajah vs. GungHo Online Entertainment |
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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