Correlation Between Gozco Plantations and Malindo Feedmill

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

Diversification Opportunities for Gozco Plantations and Malindo Feedmill

0.3

Correlation Coefficient

Gozco Plantations  Malindo Feedmill

Weak diversification

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

Pair Corralation between Gozco Plantations and Malindo Feedmill

Assuming the 90 days trading horizon Gozco Plantations Tbk is expected to under-perform the Malindo Feedmill. In addition to that, Gozco Plantations is 1.15 times more volatile than Malindo Feedmill Tbk. It trades about -0.09 of its total potential returns per unit of risk. Malindo Feedmill Tbk is currently generating about 0.05 per unit of volatility. If you would invest  76,500  in Malindo Feedmill Tbk on December 30, 2024 and sell it today you would earn a total of  4,500  from holding Malindo Feedmill Tbk or generate 5.88% return on investment over 90 days.

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

Gozco Plantations Tbk  vs.  Malindo Feedmill Tbk

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.

Malindo Feedmill Tbk

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Malindo Feedmill Tbk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Malindo Feedmill may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gozco Plantations and Malindo Feedmill

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

The idea behind Gozco Plantations Tbk and Malindo Feedmill Tbk 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.