Correlation Between GUDANG GARAM and SIVERS SEMICONDUCTORS

Can any of the company-specific risk be diversified away by investing in both GUDANG GARAM and SIVERS SEMICONDUCTORS 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 GUDANG GARAM and SIVERS SEMICONDUCTORS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GUDANG GARAM and SIVERS SEMICONDUCTORS AB, you can compare the effects of market volatilities on GUDANG GARAM and SIVERS SEMICONDUCTORS 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 GUDANG GARAM with a short position of SIVERS SEMICONDUCTORS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GUDANG GARAM and SIVERS SEMICONDUCTORS.

Diversification Opportunities for GUDANG GARAM and SIVERS SEMICONDUCTORS

0.79

Correlation Coefficient

GUDANG GARAM  SIVERS SEMICONDUCTORS

Poor diversification

The 3 months correlation between GUDANG and SIVERS is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding GUDANG GARAM and SIVERS SEMICONDUCTORS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIVERS SEMICONDUCTORS and GUDANG GARAM 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 GUDANG GARAM are associated (or correlated) with SIVERS SEMICONDUCTORS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIVERS SEMICONDUCTORS has no effect on the direction of GUDANG GARAM i.e., GUDANG GARAM and SIVERS SEMICONDUCTORS go up and down completely randomly.

Pair Corralation between GUDANG GARAM and SIVERS SEMICONDUCTORS

Assuming the 90 days trading horizon GUDANG GARAM is expected to generate 0.18 times more return on investment than SIVERS SEMICONDUCTORS. However, GUDANG GARAM is 5.59 times less risky than SIVERS SEMICONDUCTORS. It trades about -0.23 of its potential returns per unit of risk. SIVERS SEMICONDUCTORS AB is currently generating about -0.11 per unit of risk. If you would invest  90.00  in GUDANG GARAM on September 2, 2024 and sell it today you would lose (18.00) from holding GUDANG GARAM or give up 20.0% of portfolio value over 90 days.

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

GUDANG GARAM  vs.  SIVERS SEMICONDUCTORS AB

GUDANG GARAM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GUDANG GARAM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

SIVERS SEMICONDUCTORS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIVERS SEMICONDUCTORS AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with GUDANG GARAM and SIVERS SEMICONDUCTORS

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

The idea behind GUDANG GARAM and SIVERS SEMICONDUCTORS AB 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.