Correlation Between Total Bangun and Gozco Plantations
Can any of the company-specific risk be diversified away by investing in both Total Bangun and Gozco Plantations 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 Total Bangun and Gozco Plantations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Total Bangun Persada and Gozco Plantations Tbk, you can compare the effects of market volatilities on Total Bangun and Gozco Plantations 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 Total Bangun with a short position of Gozco Plantations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Bangun and Gozco Plantations.
Diversification Opportunities for Total Bangun and Gozco Plantations
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Total and Gozco is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Total Bangun Persada and Gozco Plantations Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gozco Plantations Tbk and Total Bangun 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 Total Bangun Persada are associated (or correlated) with Gozco Plantations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gozco Plantations Tbk has no effect on the direction of Total Bangun i.e., Total Bangun and Gozco Plantations go up and down completely randomly.
Pair Corralation between Total Bangun and Gozco Plantations
Assuming the 90 days trading horizon Total Bangun is expected to generate 1.25 times less return on investment than Gozco Plantations. In addition to that, Total Bangun is 1.34 times more volatile than Gozco Plantations Tbk. It trades about 0.05 of its total potential returns per unit of risk. Gozco Plantations Tbk is currently generating about 0.08 per unit of volatility. If you would invest 8,800 in Gozco Plantations Tbk on September 2, 2024 and sell it today you would earn a total of 1,000.00 from holding Gozco Plantations Tbk or generate 11.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Total Bangun Persada vs. Gozco Plantations Tbk
Performance |
| Timeline |
| Total Bangun Persada |
| Gozco Plantations Tbk |
Total Bangun and Gozco Plantations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Total Bangun and Gozco Plantations
The main advantage of trading using opposite Total Bangun and Gozco Plantations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Bangun position performs unexpectedly, Gozco Plantations 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 Gozco Plantations will offset losses from the drop in Gozco Plantations' long position.| Total Bangun vs. Matahari Department Store | Total Bangun vs. Multi Medika Internasional | Total Bangun vs. Visi Media Asia | Total Bangun vs. Bayan Resources Tbk |
| Gozco Plantations vs. Sampoerna Agro Tbk | Gozco Plantations vs. Tunas Baru Lampung | Gozco Plantations vs. Bakrie Sumatera Plantations | Gozco Plantations vs. Bisi International 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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