Correlation Between GUDANG GARAM and Fidelity National

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

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

Diversification Opportunities for GUDANG GARAM and Fidelity National

0.65

Correlation Coefficient

GUDANG GARAM  Fidelity National

Poor diversification

The 3 months correlation between GUDANG and Fidelity is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding GUDANG GARAM and Fidelity National Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National 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 Fidelity National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity National has no effect on the direction of GUDANG GARAM i.e., GUDANG GARAM and Fidelity National go up and down completely randomly.

Pair Corralation between GUDANG GARAM and Fidelity National

Assuming the 90 days trading horizon GUDANG GARAM is expected to under-perform the Fidelity National. But the stock apears to be less risky and, when comparing its historical volatility, GUDANG GARAM is 1.15 times less risky than Fidelity National. The stock trades about -0.18 of its potential returns per unit of risk. The Fidelity National Information is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  7,606  in Fidelity National Information on December 30, 2024 and sell it today you would lose (894.00) from holding Fidelity National Information or give up 11.75% 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.  Fidelity National Information

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

Fidelity National

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity National Information has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with GUDANG GARAM and Fidelity National

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

The idea behind GUDANG GARAM and Fidelity National Information 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.