Correlation Between PT Indonesia and Guna Timur

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

By analyzing existing cross correlation between PT Indonesia Kendaraan and Guna Timur Raya, you can compare the effects of market volatilities on PT Indonesia and Guna Timur 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 PT Indonesia with a short position of Guna Timur. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indonesia and Guna Timur.

Diversification Opportunities for PT Indonesia and Guna Timur

-0.79

Correlation Coefficient

PT Indonesia  Guna Timur

Pay attention - limited upside

The 3 months correlation between IPCC and Guna is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding PT Indonesia Kendaraan and Guna Timur Raya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guna Timur Raya and PT Indonesia 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 PT Indonesia Kendaraan are associated (or correlated) with Guna Timur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guna Timur Raya has no effect on the direction of PT Indonesia i.e., PT Indonesia and Guna Timur go up and down completely randomly.

Pair Corralation between PT Indonesia and Guna Timur

Assuming the 90 days trading horizon PT Indonesia Kendaraan is expected to under-perform the Guna Timur. But the stock apears to be less risky and, when comparing its historical volatility, PT Indonesia Kendaraan is 1.77 times less risky than Guna Timur. The stock trades about -0.09 of its potential returns per unit of risk. The Guna Timur Raya is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  8,100  in Guna Timur Raya on October 9, 2024 and sell it today you would earn a total of  400.00  from holding Guna Timur Raya or generate 4.94% return on investment over 90 days.

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

PT Indonesia Kendaraan  vs.  Guna Timur Raya

PT Indonesia Kendaraan

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indonesia Kendaraan are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Indonesia may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Guna Timur Raya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guna Timur Raya 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with PT Indonesia and Guna Timur

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

The idea behind PT Indonesia Kendaraan and Guna Timur Raya 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.