Correlation Between GUDANG GARAM and Amadeus IT

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

By analyzing existing cross correlation between GUDANG GARAM and Amadeus IT Group, you can compare the effects of market volatilities on GUDANG GARAM and Amadeus IT 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 Amadeus IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of GUDANG GARAM and Amadeus IT.

Diversification Opportunities for GUDANG GARAM and Amadeus IT

-0.44

Correlation Coefficient

GUDANG GARAM  Amadeus IT

Very good diversification

The 3 months correlation between GUDANG and Amadeus is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding GUDANG GARAM and Amadeus IT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amadeus IT Group 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 Amadeus IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amadeus IT Group has no effect on the direction of GUDANG GARAM i.e., GUDANG GARAM and Amadeus IT go up and down completely randomly.

Pair Corralation between GUDANG GARAM and Amadeus IT

Assuming the 90 days trading horizon GUDANG GARAM is expected to generate 2.78 times more return on investment than Amadeus IT. However, GUDANG GARAM is 2.78 times more volatile than Amadeus IT Group. It trades about 0.04 of its potential returns per unit of risk. Amadeus IT Group is currently generating about -0.06 per unit of risk. If you would invest  73.00  in GUDANG GARAM on October 5, 2024 and sell it today you would earn a total of  1.00  from holding GUDANG GARAM or generate 1.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

GUDANG GARAM  vs.  Amadeus IT Group

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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Amadeus IT Group

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Amadeus IT Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Amadeus IT is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GUDANG GARAM and Amadeus IT

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

The idea behind GUDANG GARAM and Amadeus IT Group 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 Transaction History module to view history of all your transactions and understand their impact on performance.