Correlation Between Telkom Indonesia and Gunawan Dianjaya
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia 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 Telkom Indonesia and Gunawan Dianjaya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telkom Indonesia Tbk and Gunawan Dianjaya Steel, you can compare the effects of market volatilities on Telkom Indonesia 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 Telkom Indonesia with a short position of Gunawan Dianjaya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Gunawan Dianjaya.
Diversification Opportunities for Telkom Indonesia and Gunawan Dianjaya
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Telkom and Gunawan is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk 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 Telkom Indonesia 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 Telkom Indonesia Tbk 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 Telkom Indonesia i.e., Telkom Indonesia and Gunawan Dianjaya go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Gunawan Dianjaya
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 0.69 times more return on investment than Gunawan Dianjaya. However, Telkom Indonesia Tbk is 1.44 times less risky than Gunawan Dianjaya. It trades about -0.12 of its potential returns per unit of risk. Gunawan Dianjaya Steel is currently generating about -0.2 per unit of risk. If you would invest 314,000 in Telkom Indonesia Tbk on September 2, 2024 and sell it today you would lose (43,000) from holding Telkom Indonesia Tbk or give up 13.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Gunawan Dianjaya Steel
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Gunawan Dianjaya Steel |
Telkom Indonesia and Gunawan Dianjaya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Gunawan Dianjaya
The main advantage of trading using opposite Telkom Indonesia and Gunawan Dianjaya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia 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.| Telkom Indonesia vs. Astra International Tbk | Telkom Indonesia vs. Bank Rakyat Indonesia | Telkom Indonesia vs. Bank Mandiri Persero | Telkom Indonesia vs. Bank Central Asia |
| Gunawan Dianjaya vs. Perusahaan Gas Negara | Gunawan Dianjaya vs. Telkom Indonesia Tbk | Gunawan Dianjaya vs. Mitra Pinasthika Mustika | Gunawan Dianjaya vs. Jakarta Int Hotels |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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