Correlation Between Indo Tambangraya and Gunung Raja
Can any of the company-specific risk be diversified away by investing in both Indo Tambangraya and Gunung Raja 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 Indo Tambangraya and Gunung Raja into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indo Tambangraya Megah and Gunung Raja Paksi, you can compare the effects of market volatilities on Indo Tambangraya and Gunung Raja 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 Indo Tambangraya with a short position of Gunung Raja. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Tambangraya and Gunung Raja.
Diversification Opportunities for Indo Tambangraya and Gunung Raja
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Indo and Gunung is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Indo Tambangraya Megah and Gunung Raja Paksi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gunung Raja Paksi and Indo Tambangraya 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 Indo Tambangraya Megah are associated (or correlated) with Gunung Raja. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gunung Raja Paksi has no effect on the direction of Indo Tambangraya i.e., Indo Tambangraya and Gunung Raja go up and down completely randomly.
Pair Corralation between Indo Tambangraya and Gunung Raja
Assuming the 90 days trading horizon Indo Tambangraya is expected to generate 6.14 times less return on investment than Gunung Raja. But when comparing it to its historical volatility, Indo Tambangraya Megah is 2.97 times less risky than Gunung Raja. It trades about 0.01 of its potential returns per unit of risk. Gunung Raja Paksi is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 23,198 in Gunung Raja Paksi on September 3, 2024 and sell it today you would lose (1,998) from holding Gunung Raja Paksi or give up 8.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.58% |
| Values | Daily Returns |
Indo Tambangraya Megah vs. Gunung Raja Paksi
Performance |
| Timeline |
| Indo Tambangraya Megah |
| Gunung Raja Paksi |
Indo Tambangraya and Gunung Raja Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indo Tambangraya and Gunung Raja
The main advantage of trading using opposite Indo Tambangraya and Gunung Raja positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indo Tambangraya position performs unexpectedly, Gunung Raja 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 Gunung Raja will offset losses from the drop in Gunung Raja's long position.| Indo Tambangraya vs. Bukit Asam Tbk | Indo Tambangraya vs. Adaro Energy Tbk | Indo Tambangraya vs. United Tractors Tbk | Indo Tambangraya vs. Vale Indonesia Tbk |
| Gunung Raja vs. Gunawan Dianjaya Steel | Gunung Raja vs. Steel Pipe Industry | Gunung Raja vs. Ifishdeco PT | Gunung Raja vs. Saraswanti Anugerah Makmur |
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 Stocks Directory module to find actively traded stocks across global markets.
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