Correlation Between Gunawan Dianjaya and Waskita Beton

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

Diversification Opportunities for Gunawan Dianjaya and Waskita Beton

0.73

Correlation Coefficient

Gunawan Dianjaya  Waskita Beton

Poor diversification

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

Pair Corralation between Gunawan Dianjaya and Waskita Beton

Assuming the 90 days trading horizon Gunawan Dianjaya Steel is expected to generate 0.5 times more return on investment than Waskita Beton. However, Gunawan Dianjaya Steel is 2.0 times less risky than Waskita Beton. It trades about -0.2 of its potential returns per unit of risk. Waskita Beton Precast is currently generating about -0.29 per unit of risk. If you would invest  9,000  in Gunawan Dianjaya Steel on December 1, 2024 and sell it today you would lose (900.00) from holding Gunawan Dianjaya Steel or give up 10.0% 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.  Waskita Beton Precast

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 quite persistent forward-looking signals, Gunawan Dianjaya is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Waskita Beton Precast

Risk-Adjusted Performance

Very Weak

Over the last 90 days Waskita Beton Precast 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.

Pair Trading with Gunawan Dianjaya and Waskita Beton

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

The idea behind Gunawan Dianjaya Steel and Waskita Beton Precast 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.