Correlation Between Gema Grahasarana and Bayu Buana

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

Diversification Opportunities for Gema Grahasarana and Bayu Buana

-0.02

Correlation Coefficient

Gema Grahasarana  Bayu Buana

Good diversification

The 3 months correlation between Gema and Bayu is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Gema Grahasarana Tbk and Bayu Buana Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayu Buana 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 Bayu Buana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayu Buana Tbk has no effect on the direction of Gema Grahasarana i.e., Gema Grahasarana and Bayu Buana go up and down completely randomly.

Pair Corralation between Gema Grahasarana and Bayu Buana

Assuming the 90 days trading horizon Gema Grahasarana Tbk is expected to under-perform the Bayu Buana. In addition to that, Gema Grahasarana is 2.64 times more volatile than Bayu Buana Tbk. It trades about -0.2 of its total potential returns per unit of risk. Bayu Buana Tbk is currently generating about -0.19 per unit of volatility. If you would invest  137,000  in Bayu Buana Tbk on December 2, 2024 and sell it today you would lose (16,000) from holding Bayu Buana Tbk or give up 11.68% of portfolio value over 90 days.

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

Gema Grahasarana Tbk  vs.  Bayu Buana Tbk

Gema Grahasarana Tbk

Risk-Adjusted Performance

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 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.

Bayu Buana Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bayu Buana 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 April 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 Bayu Buana

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

The idea behind Gema Grahasarana Tbk and Bayu Buana 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.