Correlation Between PT Gajah and Synchrony Financial

Can any of the company-specific risk be diversified away by investing in both PT Gajah and Synchrony Financial 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 PT Gajah and Synchrony Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Gajah Tunggal and Synchrony Financial, you can compare the effects of market volatilities on PT Gajah and Synchrony Financial 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 PT Gajah with a short position of Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Gajah and Synchrony Financial.

Diversification Opportunities for PT Gajah and Synchrony Financial

0.79

Correlation Coefficient

PT Gajah  Synchrony Financial

Poor diversification

The 3 months correlation between GH8 and Synchrony is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding PT Gajah Tunggal and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and PT Gajah 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 PT Gajah Tunggal are associated (or correlated) with Synchrony Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synchrony Financial has no effect on the direction of PT Gajah i.e., PT Gajah and Synchrony Financial go up and down completely randomly.

Pair Corralation between PT Gajah and Synchrony Financial

Assuming the 90 days horizon PT Gajah Tunggal is expected to generate 2.74 times more return on investment than Synchrony Financial. However, PT Gajah is 2.74 times more volatile than Synchrony Financial. It trades about -0.06 of its potential returns per unit of risk. Synchrony Financial is currently generating about -0.19 per unit of risk. If you would invest  6.00  in PT Gajah Tunggal on December 21, 2024 and sell it today you would lose (1.60) from holding PT Gajah Tunggal or give up 26.67% of portfolio value over 90 days.

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

PT Gajah Tunggal  vs.  Synchrony Financial

PT Gajah Tunggal

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Gajah Tunggal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Synchrony Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Synchrony Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with PT Gajah and Synchrony Financial

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

The idea behind PT Gajah Tunggal and Synchrony Financial 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.