Correlation Between Gema Grahasarana and Mahaka Media

Can any of the company-specific risk be diversified away by investing in both Gema Grahasarana and Mahaka Media 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 Gema Grahasarana and Mahaka Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gema Grahasarana Tbk and Mahaka Media Tbk, you can compare the effects of market volatilities on Gema Grahasarana and Mahaka Media 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 Gema Grahasarana with a short position of Mahaka Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gema Grahasarana and Mahaka Media.

Diversification Opportunities for Gema Grahasarana and Mahaka Media

0.64

Correlation Coefficient

Gema Grahasarana  Mahaka Media

Poor diversification

The 3 months correlation between Gema and Mahaka is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Gema Grahasarana Tbk and Mahaka Media Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mahaka Media Tbk and Gema Grahasarana 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 Gema Grahasarana Tbk are associated (or correlated) with Mahaka Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mahaka Media Tbk has no effect on the direction of Gema Grahasarana i.e., Gema Grahasarana and Mahaka Media go up and down completely randomly.

Pair Corralation between Gema Grahasarana and Mahaka Media

Assuming the 90 days trading horizon Gema Grahasarana Tbk is expected to generate 0.66 times more return on investment than Mahaka Media. However, Gema Grahasarana Tbk is 1.52 times less risky than Mahaka Media. It trades about -0.05 of its potential returns per unit of risk. Mahaka Media Tbk is currently generating about -0.09 per unit of risk. If you would invest  25,600  in Gema Grahasarana Tbk on September 13, 2024 and sell it today you would lose (2,400) from holding Gema Grahasarana Tbk or give up 9.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Gema Grahasarana Tbk  vs.  Mahaka Media Tbk

Gema Grahasarana Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gema Grahasarana 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.

Mahaka Media Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mahaka Media Tbk 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Gema Grahasarana and Mahaka Media

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

The idea behind Gema Grahasarana Tbk and Mahaka Media 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.