Correlation Between Gunawan Dianjaya and Cahayaputra Asa

Can any of the company-specific risk be diversified away by investing in both Gunawan Dianjaya and Cahayaputra Asa 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 Gunawan Dianjaya and Cahayaputra Asa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gunawan Dianjaya Steel and Cahayaputra Asa Keramik, you can compare the effects of market volatilities on Gunawan Dianjaya and Cahayaputra Asa 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 Gunawan Dianjaya with a short position of Cahayaputra Asa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gunawan Dianjaya and Cahayaputra Asa.

Diversification Opportunities for Gunawan Dianjaya and Cahayaputra Asa

0.64

Correlation Coefficient

Gunawan Dianjaya  Cahayaputra Asa

Poor diversification

The 3 months correlation between Gunawan and Cahayaputra is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Gunawan Dianjaya Steel and Cahayaputra Asa Keramik in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cahayaputra Asa Keramik and Gunawan Dianjaya 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 Gunawan Dianjaya Steel are associated (or correlated) with Cahayaputra Asa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cahayaputra Asa Keramik has no effect on the direction of Gunawan Dianjaya i.e., Gunawan Dianjaya and Cahayaputra Asa go up and down completely randomly.

Pair Corralation between Gunawan Dianjaya and Cahayaputra Asa

Assuming the 90 days trading horizon Gunawan Dianjaya Steel is expected to under-perform the Cahayaputra Asa. In addition to that, Gunawan Dianjaya is 1.34 times more volatile than Cahayaputra Asa Keramik. It trades about -0.2 of its total potential returns per unit of risk. Cahayaputra Asa Keramik is currently generating about 0.09 per unit of volatility. If you would invest  13,500  in Cahayaputra Asa Keramik on December 1, 2024 and sell it today you would earn a total of  400.00  from holding Cahayaputra Asa Keramik or generate 2.96% return on investment over 90 days.

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

Gunawan Dianjaya Steel  vs.  Cahayaputra Asa Keramik

Gunawan Dianjaya Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gunawan Dianjaya Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Gunawan Dianjaya is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Cahayaputra Asa Keramik

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cahayaputra Asa Keramik has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Cahayaputra Asa is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Gunawan Dianjaya and Cahayaputra Asa

The main advantage of trading using opposite Gunawan Dianjaya and Cahayaputra Asa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gunawan Dianjaya position performs unexpectedly, Cahayaputra Asa 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 Cahayaputra Asa will offset losses from the drop in Cahayaputra Asa's long position.

The idea behind Gunawan Dianjaya Steel and Cahayaputra Asa Keramik 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 Transaction History module to view history of all your transactions and understand their impact on performance.