Correlation Between Gajah Tunggal and Perusahaan Perkebunan

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

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

Diversification Opportunities for Gajah Tunggal and Perusahaan Perkebunan

0.08

Correlation Coefficient

Gajah Tunggal  Perusahaan Perkebunan

Significant diversification

The 3 months correlation between Gajah and Perusahaan is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Gajah Tunggal Tbk and Perusahaan Perkebunan London in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perusahaan Perkebunan and Gajah Tunggal 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 Gajah Tunggal Tbk are associated (or correlated) with Perusahaan Perkebunan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perusahaan Perkebunan has no effect on the direction of Gajah Tunggal i.e., Gajah Tunggal and Perusahaan Perkebunan go up and down completely randomly.

Pair Corralation between Gajah Tunggal and Perusahaan Perkebunan

Assuming the 90 days trading horizon Gajah Tunggal Tbk is expected to generate 0.88 times more return on investment than Perusahaan Perkebunan. However, Gajah Tunggal Tbk is 1.14 times less risky than Perusahaan Perkebunan. It trades about -0.04 of its potential returns per unit of risk. Perusahaan Perkebunan London is currently generating about -0.1 per unit of risk. If you would invest  113,500  in Gajah Tunggal Tbk on November 29, 2024 and sell it today you would lose (6,000) from holding Gajah Tunggal Tbk or give up 5.29% of portfolio value over 90 days.

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

Gajah Tunggal Tbk  vs.  Perusahaan Perkebunan London

Gajah Tunggal Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gajah Tunggal Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Gajah Tunggal is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Perusahaan Perkebunan

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Gajah Tunggal and Perusahaan Perkebunan

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

The idea behind Gajah Tunggal Tbk and Perusahaan Perkebunan London 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.