Correlation Between Gozco Plantations and Diamond Citra

Can any of the company-specific risk be diversified away by investing in both Gozco Plantations and Diamond Citra 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 Gozco Plantations and Diamond Citra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gozco Plantations Tbk and Diamond Citra Propertindo, you can compare the effects of market volatilities on Gozco Plantations and Diamond Citra 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 Gozco Plantations with a short position of Diamond Citra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gozco Plantations and Diamond Citra.

Diversification Opportunities for Gozco Plantations and Diamond Citra

0.61

Correlation Coefficient

Gozco Plantations  Diamond Citra

Poor diversification

The 3 months correlation between Gozco and Diamond is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Gozco Plantations Tbk and Diamond Citra Propertindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Citra Propertindo and Gozco Plantations 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 Gozco Plantations Tbk are associated (or correlated) with Diamond Citra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Citra Propertindo has no effect on the direction of Gozco Plantations i.e., Gozco Plantations and Diamond Citra go up and down completely randomly.

Pair Corralation between Gozco Plantations and Diamond Citra

Assuming the 90 days trading horizon Gozco Plantations Tbk is expected to under-perform the Diamond Citra. But the stock apears to be less risky and, when comparing its historical volatility, Gozco Plantations Tbk is 2.71 times less risky than Diamond Citra. The stock trades about -0.09 of its potential returns per unit of risk. The Diamond Citra Propertindo is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  800.00  in Diamond Citra Propertindo on December 30, 2024 and sell it today you would lose (100.00) from holding Diamond Citra Propertindo or give up 12.5% of portfolio value over 90 days.

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

Gozco Plantations Tbk  vs.  Diamond Citra Propertindo

Gozco Plantations Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gozco Plantations 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.

Diamond Citra Propertindo

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Gozco Plantations and Diamond Citra

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

The idea behind Gozco Plantations Tbk and Diamond Citra Propertindo 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.