Correlation Between Kawasan Industri and Gajah Tunggal
Can any of the company-specific risk be diversified away by investing in both Kawasan Industri and Gajah Tunggal 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 Kawasan Industri and Gajah Tunggal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kawasan Industri Jababeka and Gajah Tunggal Tbk, you can compare the effects of market volatilities on Kawasan Industri and Gajah Tunggal 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 Kawasan Industri with a short position of Gajah Tunggal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kawasan Industri and Gajah Tunggal.
Diversification Opportunities for Kawasan Industri and Gajah Tunggal
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kawasan and Gajah is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Kawasan Industri Jababeka and Gajah Tunggal Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gajah Tunggal Tbk and Kawasan Industri 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 Kawasan Industri Jababeka are associated (or correlated) with Gajah Tunggal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gajah Tunggal Tbk has no effect on the direction of Kawasan Industri i.e., Kawasan Industri and Gajah Tunggal go up and down completely randomly.
Pair Corralation between Kawasan Industri and Gajah Tunggal
Assuming the 90 days trading horizon Kawasan Industri is expected to generate 1.12 times less return on investment than Gajah Tunggal. But when comparing it to its historical volatility, Kawasan Industri Jababeka is 1.65 times less risky than Gajah Tunggal. It trades about 0.06 of its potential returns per unit of risk. Gajah Tunggal Tbk is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 80,979 in Gajah Tunggal Tbk on August 31, 2024 and sell it today you would earn a total of 33,021 from holding Gajah Tunggal Tbk or generate 40.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.44% |
| Values | Daily Returns |
Kawasan Industri Jababeka vs. Gajah Tunggal Tbk
Performance |
| Timeline |
| Kawasan Industri Jababeka |
| Gajah Tunggal Tbk |
Kawasan Industri and Gajah Tunggal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kawasan Industri and Gajah Tunggal
The main advantage of trading using opposite Kawasan Industri and Gajah Tunggal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kawasan Industri position performs unexpectedly, Gajah Tunggal 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 Gajah Tunggal will offset losses from the drop in Gajah Tunggal's long position.| Kawasan Industri vs. Bakrieland Development Tbk | Kawasan Industri vs. Ciputra Development Tbk | Kawasan Industri vs. Sentul City Tbk | Kawasan Industri vs. Solusi Bangun Indonesia |
| Gajah Tunggal vs. Perusahaan Perkebunan London | Gajah Tunggal vs. Solusi Bangun Indonesia | Gajah Tunggal vs. Ciputra Development Tbk | Gajah Tunggal vs. Global Mediacom 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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