Correlation Between Gajah Tunggal and Polychem Indonesia
Can any of the company-specific risk be diversified away by investing in both Gajah Tunggal and Polychem 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 Gajah Tunggal and Polychem Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gajah Tunggal Tbk and Polychem Indonesia Tbk, you can compare the effects of market volatilities on Gajah Tunggal and Polychem 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 Gajah Tunggal with a short position of Polychem Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gajah Tunggal and Polychem Indonesia.
Diversification Opportunities for Gajah Tunggal and Polychem Indonesia
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gajah and Polychem is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Gajah Tunggal Tbk and Polychem Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polychem Indonesia Tbk and Gajah Tunggal 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 Gajah Tunggal Tbk are associated (or correlated) with Polychem Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polychem Indonesia Tbk has no effect on the direction of Gajah Tunggal i.e., Gajah Tunggal and Polychem Indonesia go up and down completely randomly.
Pair Corralation between Gajah Tunggal and Polychem Indonesia
Assuming the 90 days trading horizon Gajah Tunggal Tbk is expected to generate 1.22 times more return on investment than Polychem Indonesia. However, Gajah Tunggal is 1.22 times more volatile than Polychem Indonesia Tbk. It trades about 0.05 of its potential returns per unit of risk. Polychem Indonesia Tbk is currently generating about -0.02 per unit of risk. If you would invest 86,250 in Gajah Tunggal Tbk on September 1, 2024 and sell it today you would earn a total of 27,750 from holding Gajah Tunggal Tbk or generate 32.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.61% |
| Values | Daily Returns |
Gajah Tunggal Tbk vs. Polychem Indonesia Tbk
Performance |
| Timeline |
| Gajah Tunggal Tbk |
| Polychem Indonesia Tbk |
Gajah Tunggal and Polychem Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gajah Tunggal and Polychem Indonesia
The main advantage of trading using opposite Gajah Tunggal and Polychem Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gajah Tunggal position performs unexpectedly, Polychem 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 Polychem Indonesia will offset losses from the drop in Polychem Indonesia's long position.| Gajah Tunggal vs. Perusahaan Perkebunan London | Gajah Tunggal vs. Solusi Bangun Indonesia | Gajah Tunggal vs. Ciputra Development Tbk | Gajah Tunggal vs. Global Mediacom Tbk |
| Polychem Indonesia vs. Perusahaan Gas Negara | Polychem Indonesia vs. Telkom Indonesia Tbk | Polychem Indonesia vs. Mitra Pinasthika Mustika | Polychem Indonesia vs. Jakarta Int Hotels |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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