Correlation Between Steel Pipe and Gunawan Dianjaya
Can any of the company-specific risk be diversified away by investing in both Steel Pipe and Gunawan Dianjaya 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 Steel Pipe and Gunawan Dianjaya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Pipe Industry and Gunawan Dianjaya Steel, you can compare the effects of market volatilities on Steel Pipe and Gunawan Dianjaya 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 Steel Pipe with a short position of Gunawan Dianjaya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Pipe and Gunawan Dianjaya.
Diversification Opportunities for Steel Pipe and Gunawan Dianjaya
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Steel and Gunawan is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Steel Pipe Industry and Gunawan Dianjaya Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gunawan Dianjaya Steel and Steel Pipe 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 Steel Pipe Industry are associated (or correlated) with Gunawan Dianjaya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gunawan Dianjaya Steel has no effect on the direction of Steel Pipe i.e., Steel Pipe and Gunawan Dianjaya go up and down completely randomly.
Pair Corralation between Steel Pipe and Gunawan Dianjaya
Assuming the 90 days trading horizon Steel Pipe Industry is expected to generate 0.2 times more return on investment than Gunawan Dianjaya. However, Steel Pipe Industry is 4.98 times less risky than Gunawan Dianjaya. It trades about -0.44 of its potential returns per unit of risk. Gunawan Dianjaya Steel is currently generating about -0.19 per unit of risk. If you would invest 30,400 in Steel Pipe Industry on August 27, 2024 and sell it today you would lose (2,200) from holding Steel Pipe Industry or give up 7.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Pipe Industry vs. Gunawan Dianjaya Steel
Performance |
| Timeline |
| Steel Pipe Industry |
| Gunawan Dianjaya Steel |
Steel Pipe and Gunawan Dianjaya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Pipe and Gunawan Dianjaya
The main advantage of trading using opposite Steel Pipe and Gunawan Dianjaya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Pipe position performs unexpectedly, Gunawan Dianjaya 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 Gunawan Dianjaya will offset losses from the drop in Gunawan Dianjaya's long position.| Steel Pipe vs. Bekasi Fajar Industrial | Steel Pipe vs. Krakatau Steel Persero | Steel Pipe vs. Saranacentral Bajatama Tbk | Steel Pipe vs. Salim Ivomas Pratama |
| Gunawan Dianjaya vs. Kedaung Indah Can | Gunawan Dianjaya vs. Langgeng Makmur Industri | Gunawan Dianjaya vs. Kabelindo Murni Tbk | Gunawan Dianjaya vs. Mustika Ratu 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 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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