Correlation Between Gunawan Dianjaya and Equity Development

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

Diversification Opportunities for Gunawan Dianjaya and Equity Development

0.15

Correlation Coefficient

Gunawan Dianjaya  Equity Development

Average diversification

The 3 months correlation between Gunawan and Equity is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Gunawan Dianjaya Steel and Equity Development Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Development 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 Equity Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Development has no effect on the direction of Gunawan Dianjaya i.e., Gunawan Dianjaya and Equity Development go up and down completely randomly.

Pair Corralation between Gunawan Dianjaya and Equity Development

Assuming the 90 days trading horizon Gunawan Dianjaya Steel is expected to under-perform the Equity Development. But the stock apears to be less risky and, when comparing its historical volatility, Gunawan Dianjaya Steel is 1.4 times less risky than Equity Development. The stock trades about -0.18 of its potential returns per unit of risk. The Equity Development Investment is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  5,400  in Equity Development Investment on December 30, 2024 and sell it today you would lose (100.00) from holding Equity Development Investment or give up 1.85% of portfolio value over 90 days.

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

Gunawan Dianjaya Steel  vs.  Equity Development Investment

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 conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Equity Development

Risk-Adjusted Performance

Very Weak

Over the last 90 days Equity Development Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Equity Development 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 Equity Development

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

The idea behind Gunawan Dianjaya Steel and Equity Development Investment 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.