Correlation Between Supreme Cable and Gudang Garam
Can any of the company-specific risk be diversified away by investing in both Supreme Cable and Gudang Garam 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 Supreme Cable and Gudang Garam into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Supreme Cable Manufacturing and Gudang Garam Tbk, you can compare the effects of market volatilities on Supreme Cable and Gudang Garam 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 Supreme Cable with a short position of Gudang Garam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supreme Cable and Gudang Garam.
Diversification Opportunities for Supreme Cable and Gudang Garam
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Supreme and Gudang is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Supreme Cable Manufacturing and Gudang Garam Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gudang Garam Tbk and Supreme Cable 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 Supreme Cable Manufacturing are associated (or correlated) with Gudang Garam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gudang Garam Tbk has no effect on the direction of Supreme Cable i.e., Supreme Cable and Gudang Garam go up and down completely randomly.
Pair Corralation between Supreme Cable and Gudang Garam
Assuming the 90 days trading horizon Supreme Cable Manufacturing is expected to under-perform the Gudang Garam. In addition to that, Supreme Cable is 3.8 times more volatile than Gudang Garam Tbk. It trades about -0.05 of its total potential returns per unit of risk. Gudang Garam Tbk is currently generating about -0.14 per unit of volatility. If you would invest 2,142,500 in Gudang Garam Tbk on August 24, 2024 and sell it today you would lose (830,000) from holding Gudang Garam Tbk or give up 38.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Supreme Cable Manufacturing vs. Gudang Garam Tbk
Performance |
| Timeline |
| Supreme Cable Manufa |
| Gudang Garam Tbk |
Supreme Cable and Gudang Garam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Supreme Cable and Gudang Garam
The main advantage of trading using opposite Supreme Cable and Gudang Garam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supreme Cable position performs unexpectedly, Gudang Garam 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 Gudang Garam will offset losses from the drop in Gudang Garam's long position.| Supreme Cable vs. Astra Otoparts Tbk | Supreme Cable vs. Citra Marga Nusaphala | Supreme Cable vs. Metrodata Electronics Tbk | Supreme Cable vs. Gajah Tunggal Tbk |
| Gudang Garam vs. Hanjaya Mandala Sampoerna | Gudang Garam vs. Unilever Indonesia Tbk | Gudang Garam vs. PT Indofood Sukses | Gudang Garam vs. United Tractors 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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