Correlation Between GUDANG GARAM and Wal Mart
Can any of the company-specific risk be diversified away by investing in both GUDANG GARAM and Wal Mart 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 Wal Mart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GUDANG GARAM and Wal Mart de Mxico, you can compare the effects of market volatilities on GUDANG GARAM and Wal Mart 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 Wal Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of GUDANG GARAM and Wal Mart.
Diversification Opportunities for GUDANG GARAM and Wal Mart
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GUDANG and Wal is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding GUDANG GARAM and Wal Mart de Mxico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wal Mart de 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 Wal Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wal Mart de has no effect on the direction of GUDANG GARAM i.e., GUDANG GARAM and Wal Mart go up and down completely randomly.
Pair Corralation between GUDANG GARAM and Wal Mart
Assuming the 90 days trading horizon GUDANG GARAM is expected to under-perform the Wal Mart. But the stock apears to be less risky and, when comparing its historical volatility, GUDANG GARAM is 1.05 times less risky than Wal Mart. The stock trades about -0.18 of its potential returns per unit of risk. The Wal Mart de Mxico is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 258.00 in Wal Mart de Mxico on December 30, 2024 and sell it today you would lose (2.00) from holding Wal Mart de Mxico or give up 0.78% 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. Wal Mart de Mxico
Performance |
Timeline |
GUDANG GARAM |
Wal Mart de |
GUDANG GARAM and Wal Mart Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GUDANG GARAM and Wal Mart
The main advantage of trading using opposite GUDANG GARAM and Wal Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GUDANG GARAM position performs unexpectedly, Wal Mart 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 Wal Mart will offset losses from the drop in Wal Mart's long position.GUDANG GARAM vs. De Grey Mining | GUDANG GARAM vs. MOLSON RS BEVERAGE | GUDANG GARAM vs. ANGLO ASIAN MINING | GUDANG GARAM vs. ITALIAN WINE BRANDS |
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Check out your portfolio center.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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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