Correlation Between Gajah Tunggal and Wahana Pronatural

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Can any of the company-specific risk be diversified away by investing in both Gajah Tunggal and Wahana Pronatural 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 Wahana Pronatural 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 Wahana Pronatural, you can compare the effects of market volatilities on Gajah Tunggal and Wahana Pronatural 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 Wahana Pronatural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gajah Tunggal and Wahana Pronatural.

Diversification Opportunities for Gajah Tunggal and Wahana Pronatural

GajahWahanaDiversified AwayGajahWahanaDiversified Away100%
0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Gajah and Wahana is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Gajah Tunggal Tbk and Wahana Pronatural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wahana Pronatural 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 Wahana Pronatural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wahana Pronatural has no effect on the direction of Gajah Tunggal i.e., Gajah Tunggal and Wahana Pronatural go up and down completely randomly.

Pair Corralation between Gajah Tunggal and Wahana Pronatural

Assuming the 90 days trading horizon Gajah Tunggal Tbk is expected to generate 0.31 times more return on investment than Wahana Pronatural. However, Gajah Tunggal Tbk is 3.2 times less risky than Wahana Pronatural. It trades about -0.02 of its potential returns per unit of risk. Wahana Pronatural is currently generating about -0.11 per unit of risk. If you would invest  117,500  in Gajah Tunggal Tbk on November 24, 2024 and sell it today you would lose (1,000.00) from holding Gajah Tunggal Tbk or give up 0.85% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Gajah Tunggal Tbk  vs.  Wahana Pronatural

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 0204060
JavaScript chart by amCharts 3.21.15GJTL WAPO
       Timeline  
Gajah Tunggal Tbk 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1,0501,1001,1501,200
Wahana Pronatural 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Wahana Pronatural are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Wahana Pronatural disclosed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb100120140160180

Gajah Tunggal and Wahana Pronatural Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.96-2.22-1.47-0.73-0.0120.71.422.142.873.59 0.020.040.060.080.100.12
JavaScript chart by amCharts 3.21.15GJTL WAPO
       Returns  

Pair Trading with Gajah Tunggal and Wahana Pronatural

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

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