Correlation Between Gajah Tunggal and Indika Energy
Can any of the company-specific risk be diversified away by investing in both Gajah Tunggal and Indika Energy 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 Indika Energy 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 Indika Energy Tbk, you can compare the effects of market volatilities on Gajah Tunggal and Indika Energy 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 Indika Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gajah Tunggal and Indika Energy.
Diversification Opportunities for Gajah Tunggal and Indika Energy
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gajah and Indika is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Gajah Tunggal Tbk and Indika Energy Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indika Energy 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 Indika Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indika Energy Tbk has no effect on the direction of Gajah Tunggal i.e., Gajah Tunggal and Indika Energy go up and down completely randomly.
Pair Corralation between Gajah Tunggal and Indika Energy
Assuming the 90 days trading horizon Gajah Tunggal is expected to generate 6.64 times less return on investment than Indika Energy. But when comparing it to its historical volatility, Gajah Tunggal Tbk is 1.31 times less risky than Indika Energy. It trades about 0.02 of its potential returns per unit of risk. Indika Energy Tbk is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 131,000 in Indika Energy Tbk on November 3, 2024 and sell it today you would earn a total of 37,500 from holding Indika Energy Tbk or generate 28.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gajah Tunggal Tbk vs. Indika Energy Tbk
Performance |
| Timeline |
| Gajah Tunggal Tbk |
| Indika Energy Tbk |
Gajah Tunggal and Indika Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gajah Tunggal and Indika Energy
The main advantage of trading using opposite Gajah Tunggal and Indika Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gajah Tunggal position performs unexpectedly, Indika Energy 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 Indika Energy will offset losses from the drop in Indika Energy'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 |
| Indika Energy vs. Indo Tambangraya Megah | Indika Energy vs. Adaro Energy Tbk | Indika Energy vs. Medco Energi Internasional | Indika Energy vs. Vale Indonesia 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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