Correlation Between Gunawan Dianjaya and Steel Pipe

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

Diversification Opportunities for Gunawan Dianjaya and Steel Pipe

0.7

Correlation Coefficient

Gunawan Dianjaya  Steel Pipe

Poor diversification

The 3 months correlation between Gunawan and Steel is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Gunawan Dianjaya Steel and Steel Pipe Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Pipe Industry 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 Steel Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Pipe Industry has no effect on the direction of Gunawan Dianjaya i.e., Gunawan Dianjaya and Steel Pipe go up and down completely randomly.

Pair Corralation between Gunawan Dianjaya and Steel Pipe

Assuming the 90 days trading horizon Gunawan Dianjaya Steel is expected to under-perform the Steel Pipe. But the stock apears to be less risky and, when comparing its historical volatility, Gunawan Dianjaya Steel is 1.36 times less risky than Steel Pipe. The stock trades about -0.18 of its potential returns per unit of risk. The Steel Pipe Industry is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  26,800  in Steel Pipe Industry on December 30, 2024 and sell it today you would lose (600.00) from holding Steel Pipe Industry or give up 2.24% of portfolio value over 90 days.

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

Gunawan Dianjaya Steel  vs.  Steel Pipe Industry

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.

Steel Pipe Industry

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Gunawan Dianjaya Steel and Steel Pipe Industry 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.