Correlation Between Gema Grahasarana and Inter Delta

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

Diversification Opportunities for Gema Grahasarana and Inter Delta

0.0

Correlation Coefficient

Gema Grahasarana  Inter Delta

Pay attention - limited upside

The 3 months correlation between Gema and Inter is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gema Grahasarana Tbk and Inter Delta Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Delta 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 Inter Delta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Delta Tbk has no effect on the direction of Gema Grahasarana i.e., Gema Grahasarana and Inter Delta go up and down completely randomly.

Pair Corralation between Gema Grahasarana and Inter Delta

Assuming the 90 days trading horizon Gema Grahasarana Tbk is expected to under-perform the Inter Delta. But the stock apears to be less risky and, when comparing its historical volatility, Gema Grahasarana Tbk is 2.44 times less risky than Inter Delta. The stock trades about -0.24 of its potential returns per unit of risk. The Inter Delta Tbk is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  17,500  in Inter Delta Tbk on September 15, 2024 and sell it today you would earn a total of  2,900  from holding Inter Delta Tbk or generate 16.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Gema Grahasarana Tbk  vs.  Inter Delta 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 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.

Inter Delta Tbk

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Inter Delta Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Inter Delta disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gema Grahasarana and Inter Delta

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

The idea behind Gema Grahasarana Tbk and Inter Delta 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.