Correlation Between TOREX SEMICONDUCTOR and GUDANG GARAM

Can any of the company-specific risk be diversified away by investing in both TOREX SEMICONDUCTOR 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 TOREX SEMICONDUCTOR and GUDANG GARAM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TOREX SEMICONDUCTOR LTD and GUDANG GARAM, you can compare the effects of market volatilities on TOREX SEMICONDUCTOR 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 TOREX SEMICONDUCTOR with a short position of GUDANG GARAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOREX SEMICONDUCTOR and GUDANG GARAM.

Diversification Opportunities for TOREX SEMICONDUCTOR and GUDANG GARAM

0.57

Correlation Coefficient

TOREX SEMICONDUCTOR  GUDANG GARAM

Very weak diversification

The 3 months correlation between TOREX and GUDANG is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding TOREX SEMICONDUCTOR LTD and GUDANG GARAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUDANG GARAM and TOREX SEMICONDUCTOR 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 TOREX SEMICONDUCTOR LTD 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 has no effect on the direction of TOREX SEMICONDUCTOR i.e., TOREX SEMICONDUCTOR and GUDANG GARAM go up and down completely randomly.

Pair Corralation between TOREX SEMICONDUCTOR and GUDANG GARAM

Assuming the 90 days horizon TOREX SEMICONDUCTOR LTD is expected to generate 1.27 times more return on investment than GUDANG GARAM. However, TOREX SEMICONDUCTOR is 1.27 times more volatile than GUDANG GARAM. It trades about -0.14 of its potential returns per unit of risk. GUDANG GARAM is currently generating about -0.23 per unit of risk. If you would invest  870.00  in TOREX SEMICONDUCTOR LTD on October 24, 2024 and sell it today you would lose (175.00) from holding TOREX SEMICONDUCTOR LTD or give up 20.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

TOREX SEMICONDUCTOR LTD  vs.  GUDANG GARAM

TOREX SEMICONDUCTOR LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TOREX SEMICONDUCTOR LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

GUDANG GARAM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GUDANG GARAM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with TOREX SEMICONDUCTOR and GUDANG GARAM

The main advantage of trading using opposite TOREX SEMICONDUCTOR and GUDANG GARAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOREX SEMICONDUCTOR 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.

The idea behind TOREX SEMICONDUCTOR LTD and GUDANG GARAM pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..