Correlation Between Gunawan Dianjaya and Ristia Bintang

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

Diversification Opportunities for Gunawan Dianjaya and Ristia Bintang

-0.59

Correlation Coefficient

Gunawan Dianjaya  Ristia Bintang

Excellent diversification

The 3 months correlation between Gunawan and Ristia is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Gunawan Dianjaya Steel and Ristia Bintang Mahkotasejati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ristia Bintang Mahko 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 Ristia Bintang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ristia Bintang Mahko has no effect on the direction of Gunawan Dianjaya i.e., Gunawan Dianjaya and Ristia Bintang go up and down completely randomly.

Pair Corralation between Gunawan Dianjaya and Ristia Bintang

Assuming the 90 days trading horizon Gunawan Dianjaya Steel is expected to under-perform the Ristia Bintang. In addition to that, Gunawan Dianjaya is 1.07 times more volatile than Ristia Bintang Mahkotasejati. It trades about -0.12 of its total potential returns per unit of risk. Ristia Bintang Mahkotasejati is currently generating about -0.04 per unit of volatility. If you would invest  3,100  in Ristia Bintang Mahkotasejati on October 11, 2024 and sell it today you would lose (100.00) from holding Ristia Bintang Mahkotasejati or give up 3.23% of portfolio value over 90 days.

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

Gunawan Dianjaya Steel  vs.  Ristia Bintang Mahkotasejati

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

Ristia Bintang Mahko

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ristia Bintang Mahkotasejati are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Ristia Bintang may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gunawan Dianjaya and Ristia Bintang

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

The idea behind Gunawan Dianjaya Steel and Ristia Bintang Mahkotasejati 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.