Correlation Between Gossan Resources and PT Hexindo

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

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

Diversification Opportunities for Gossan Resources and PT Hexindo

-0.3

Correlation Coefficient

Gossan Resources  PT Hexindo

Very good diversification

The 3 months correlation between Gossan and HX1A is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Gossan Resources and PT Hexindo Adiperkasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Hexindo Adiperkasa and Gossan Resources 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 Gossan Resources are associated (or correlated) with PT Hexindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Hexindo Adiperkasa has no effect on the direction of Gossan Resources i.e., Gossan Resources and PT Hexindo go up and down completely randomly.

Pair Corralation between Gossan Resources and PT Hexindo

Assuming the 90 days horizon Gossan Resources is expected to generate 4.27 times more return on investment than PT Hexindo. However, Gossan Resources is 4.27 times more volatile than PT Hexindo Adiperkasa. It trades about 0.03 of its potential returns per unit of risk. PT Hexindo Adiperkasa is currently generating about 0.0 per unit of risk. If you would invest  0.75  in Gossan Resources on October 10, 2024 and sell it today you would lose (0.35) from holding Gossan Resources or give up 46.67% of portfolio value over 90 days.

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

Gossan Resources  vs.  PT Hexindo Adiperkasa

Gossan Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gossan Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gossan Resources reported solid returns over the last few months and may actually be approaching a breakup point.

PT Hexindo Adiperkasa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Hexindo Adiperkasa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PT Hexindo is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Gossan Resources and PT Hexindo

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

The idea behind Gossan Resources and PT Hexindo Adiperkasa 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.