Correlation Between GUDANG GARAM and Link Real

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

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

Diversification Opportunities for GUDANG GARAM and Link Real

-0.13

Correlation Coefficient

GUDANG GARAM  Link Real

Good diversification

The 3 months correlation between GUDANG and Link is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding GUDANG GARAM and Link Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Link Real Estate 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 Link Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Link Real Estate has no effect on the direction of GUDANG GARAM i.e., GUDANG GARAM and Link Real go up and down completely randomly.

Pair Corralation between GUDANG GARAM and Link Real

Assuming the 90 days trading horizon GUDANG GARAM is expected to under-perform the Link Real. In addition to that, GUDANG GARAM is 2.53 times more volatile than Link Real Estate. It trades about -0.08 of its total potential returns per unit of risk. Link Real Estate is currently generating about 0.33 per unit of volatility. If you would invest  390.00  in Link Real Estate on November 29, 2024 and sell it today you would earn a total of  43.00  from holding Link Real Estate or generate 11.03% return on investment over 90 days.

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

GUDANG GARAM  vs.  Link Real Estate

GUDANG GARAM

Risk-Adjusted Performance

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 March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Link Real Estate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Link Real Estate are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Link Real 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 Link Real

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

The idea behind GUDANG GARAM and Link Real Estate 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.