Correlation Between GUDANG GARAM and Verisk Analytics

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

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

Diversification Opportunities for GUDANG GARAM and Verisk Analytics

-0.87

Correlation Coefficient

GUDANG GARAM  Verisk Analytics

Pay attention - limited upside

The 3 months correlation between GUDANG and Verisk is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding GUDANG GARAM and Verisk Analytics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verisk Analytics 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 Verisk Analytics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verisk Analytics has no effect on the direction of GUDANG GARAM i.e., GUDANG GARAM and Verisk Analytics go up and down completely randomly.

Pair Corralation between GUDANG GARAM and Verisk Analytics

Assuming the 90 days trading horizon GUDANG GARAM is expected to under-perform the Verisk Analytics. In addition to that, GUDANG GARAM is 1.39 times more volatile than Verisk Analytics. It trades about -0.11 of its total potential returns per unit of risk. Verisk Analytics is currently generating about 0.12 per unit of volatility. If you would invest  24,611  in Verisk Analytics on September 12, 2024 and sell it today you would earn a total of  2,299  from holding Verisk Analytics or generate 9.34% return on investment over 90 days.

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

GUDANG GARAM  vs.  Verisk Analytics

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 latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Verisk Analytics

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Verisk Analytics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Verisk Analytics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GUDANG GARAM and Verisk Analytics

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

The idea behind GUDANG GARAM and Verisk Analytics 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.