Correlation Between Gema Grahasarana and Fortune Indonesia

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

Diversification Opportunities for Gema Grahasarana and Fortune Indonesia

0.64

Correlation Coefficient

Gema Grahasarana  Fortune Indonesia

Poor diversification

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

Pair Corralation between Gema Grahasarana and Fortune Indonesia

Assuming the 90 days trading horizon Gema Grahasarana Tbk is expected to generate 0.22 times more return on investment than Fortune Indonesia. However, Gema Grahasarana Tbk is 4.45 times less risky than Fortune Indonesia. It trades about -0.09 of its potential returns per unit of risk. Fortune Indonesia Tbk is currently generating about -0.26 per unit of risk. If you would invest  16,200  in Gema Grahasarana Tbk on December 30, 2024 and sell it today you would lose (1,900) from holding Gema Grahasarana Tbk or give up 11.73% of portfolio value over 90 days.

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

Gema Grahasarana Tbk  vs.  Fortune Indonesia 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 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.

Fortune Indonesia Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortune Indonesia 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 Fortune Indonesia

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

The idea behind Gema Grahasarana Tbk and Fortune Indonesia 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.