Correlation Between Gajah Tunggal and Hexindo Adiperkasa
Can any of the company-specific risk be diversified away by investing in both Gajah Tunggal and Hexindo Adiperkasa 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 Hexindo Adiperkasa 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 Hexindo Adiperkasa Tbk, you can compare the effects of market volatilities on Gajah Tunggal and Hexindo Adiperkasa 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 Hexindo Adiperkasa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gajah Tunggal and Hexindo Adiperkasa.
Diversification Opportunities for Gajah Tunggal and Hexindo Adiperkasa
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gajah and Hexindo is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Gajah Tunggal Tbk and Hexindo Adiperkasa Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexindo Adiperkasa 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 Hexindo Adiperkasa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexindo Adiperkasa Tbk has no effect on the direction of Gajah Tunggal i.e., Gajah Tunggal and Hexindo Adiperkasa go up and down completely randomly.
Pair Corralation between Gajah Tunggal and Hexindo Adiperkasa
Assuming the 90 days trading horizon Gajah Tunggal Tbk is expected to generate 2.9 times more return on investment than Hexindo Adiperkasa. However, Gajah Tunggal is 2.9 times more volatile than Hexindo Adiperkasa Tbk. It trades about -0.04 of its potential returns per unit of risk. Hexindo Adiperkasa Tbk is currently generating about -0.57 per unit of risk. If you would invest 121,000 in Gajah Tunggal Tbk on August 30, 2024 and sell it today you would lose (5,000) from holding Gajah Tunggal Tbk or give up 4.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gajah Tunggal Tbk vs. Hexindo Adiperkasa Tbk
Performance |
| Timeline |
| Gajah Tunggal Tbk |
| Hexindo Adiperkasa Tbk |
Gajah Tunggal and Hexindo Adiperkasa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gajah Tunggal and Hexindo Adiperkasa
The main advantage of trading using opposite Gajah Tunggal and Hexindo Adiperkasa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gajah Tunggal position performs unexpectedly, Hexindo Adiperkasa 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 Hexindo Adiperkasa will offset losses from the drop in Hexindo Adiperkasa'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 |
| Hexindo Adiperkasa vs. Bisi International Tbk | Hexindo Adiperkasa vs. Sampoerna Agro Tbk | Hexindo Adiperkasa vs. Akr Corporindo Tbk | Hexindo Adiperkasa vs. Solusi Bangun Indonesia |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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