Correlation Between Gunawan Dianjaya and Timah Persero

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

Diversification Opportunities for Gunawan Dianjaya and Timah Persero

0.73

Correlation Coefficient

Gunawan Dianjaya  Timah Persero

Poor diversification

The 3 months correlation between Gunawan and Timah is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Gunawan Dianjaya Steel and Timah Persero Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timah Persero Tbk 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 Timah Persero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timah Persero Tbk has no effect on the direction of Gunawan Dianjaya i.e., Gunawan Dianjaya and Timah Persero go up and down completely randomly.

Pair Corralation between Gunawan Dianjaya and Timah Persero

Assuming the 90 days trading horizon Gunawan Dianjaya Steel is expected to under-perform the Timah Persero. But the stock apears to be less risky and, when comparing its historical volatility, Gunawan Dianjaya Steel is 1.92 times less risky than Timah Persero. The stock trades about -0.18 of its potential returns per unit of risk. The Timah Persero Tbk is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  107,000  in Timah Persero Tbk on December 30, 2024 and sell it today you would lose (11,000) from holding Timah Persero Tbk or give up 10.28% 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.  Timah Persero Tbk

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.

Timah Persero Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Timah Persero Tbk 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.

Pair Trading with Gunawan Dianjaya and Timah Persero

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

The idea behind Gunawan Dianjaya Steel and Timah Persero Tbk 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.