Correlation Between Gunawan Dianjaya and Cita Mineral

Can any of the company-specific risk be diversified away by investing in both Gunawan Dianjaya and Cita Mineral 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 Cita Mineral 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 Cita Mineral Investindo, you can compare the effects of market volatilities on Gunawan Dianjaya and Cita Mineral 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 Cita Mineral. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gunawan Dianjaya and Cita Mineral.

Diversification Opportunities for Gunawan Dianjaya and Cita Mineral

-0.74

Correlation Coefficient

Gunawan Dianjaya  Cita Mineral

Pay attention - limited upside

The 3 months correlation between Gunawan and Cita is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Gunawan Dianjaya Steel and Cita Mineral Investindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cita Mineral Investindo 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 Cita Mineral. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cita Mineral Investindo has no effect on the direction of Gunawan Dianjaya i.e., Gunawan Dianjaya and Cita Mineral go up and down completely randomly.

Pair Corralation between Gunawan Dianjaya and Cita Mineral

Assuming the 90 days trading horizon Gunawan Dianjaya Steel is expected to under-perform the Cita Mineral. But the stock apears to be less risky and, when comparing its historical volatility, Gunawan Dianjaya Steel is 1.28 times less risky than Cita Mineral. The stock trades about -0.03 of its potential returns per unit of risk. The Cita Mineral Investindo is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  249,000  in Cita Mineral Investindo on September 14, 2024 and sell it today you would earn a total of  111,000  from holding Cita Mineral Investindo or generate 44.58% return on investment over 90 days.

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

Gunawan Dianjaya Steel  vs.  Cita Mineral Investindo

Gunawan Dianjaya Steel

Risk-Adjusted Performance

0 of 100

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 latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Cita Mineral Investindo

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cita Mineral Investindo are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Cita Mineral disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gunawan Dianjaya and Cita Mineral

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

The idea behind Gunawan Dianjaya Steel and Cita Mineral Investindo 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.