Correlation Between Hanesbrands and Gudang Garam

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

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

Diversification Opportunities for Hanesbrands and Gudang Garam

-0.81

Correlation Coefficient

Hanesbrands  Gudang Garam

Pay attention - limited upside

The 3 months correlation between Hanesbrands and Gudang is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Gudang Garam Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gudang Garam Tbk and Hanesbrands 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 Hanesbrands are associated (or correlated) with Gudang Garam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gudang Garam Tbk has no effect on the direction of Hanesbrands i.e., Hanesbrands and Gudang Garam go up and down completely randomly.

Pair Corralation between Hanesbrands and Gudang Garam

Considering the 90-day investment horizon Hanesbrands is expected to generate 1.16 times more return on investment than Gudang Garam. However, Hanesbrands is 1.16 times more volatile than Gudang Garam Tbk. It trades about 0.15 of its potential returns per unit of risk. Gudang Garam Tbk is currently generating about 0.14 per unit of risk. If you would invest  790.00  in Hanesbrands on September 12, 2024 and sell it today you would earn a total of  51.00  from holding Hanesbrands or generate 6.46% return on investment over 90 days.

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

Hanesbrands  vs.  Gudang Garam Tbk

Hanesbrands

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hanesbrands are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting fundamental drivers, Hanesbrands demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Gudang Garam Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gudang Garam 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Hanesbrands and Gudang Garam

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

The idea behind Hanesbrands and Gudang Garam 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.

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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 CEOs Directory module to screen CEOs from public companies around the world.