Correlation Between Gudang Garam and Cita Mineral

Can any of the company-specific risk be diversified away by investing in both Gudang Garam and Cita Mineral 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 Cita Mineral into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gudang Garam Tbk and Cita Mineral Investindo, you can compare the effects of market volatilities on Gudang Garam and Cita Mineral 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 Cita Mineral. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gudang Garam and Cita Mineral.

Diversification Opportunities for Gudang Garam and Cita Mineral

0.82

Correlation Coefficient

Gudang Garam  Cita Mineral

Very poor diversification

The 3 months correlation between Gudang and Cita is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Gudang Garam Tbk and Cita Mineral Investindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cita Mineral Investindo 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 Tbk are associated (or correlated) with Cita Mineral. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cita Mineral Investindo has no effect on the direction of Gudang Garam i.e., Gudang Garam and Cita Mineral go up and down completely randomly.

Pair Corralation between Gudang Garam and Cita Mineral

Assuming the 90 days trading horizon Gudang Garam Tbk is expected to under-perform the Cita Mineral. In addition to that, Gudang Garam is 1.21 times more volatile than Cita Mineral Investindo. It trades about -0.2 of its total potential returns per unit of risk. Cita Mineral Investindo is currently generating about -0.19 per unit of volatility. If you would invest  366,000  in Cita Mineral Investindo on December 29, 2024 and sell it today you would lose (70,000) from holding Cita Mineral Investindo or give up 19.13% of portfolio value over 90 days.

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

Gudang Garam Tbk  vs.  Cita Mineral Investindo

Gudang Garam Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gudang Garam Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Cita Mineral Investindo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cita Mineral Investindo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Gudang Garam and Cita Mineral

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

The idea behind Gudang Garam Tbk and Cita Mineral Investindo 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.