Correlation Between Grand Kartech and Pertamina Geothermal

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

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

Diversification Opportunities for Grand Kartech and Pertamina Geothermal

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Correlation Coefficient

Grand Kartech  Pertamina Geothermal

Pay attention - limited upside

The 3 months correlation between Grand and Pertamina is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Grand Kartech Tbk and Pertamina Geothermal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pertamina Geothermal and Grand Kartech 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 Grand Kartech Tbk are associated (or correlated) with Pertamina Geothermal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pertamina Geothermal has no effect on the direction of Grand Kartech i.e., Grand Kartech and Pertamina Geothermal go up and down completely randomly.

Pair Corralation between Grand Kartech and Pertamina Geothermal

If you would invest  82,919  in Pertamina Geothermal Energy on October 11, 2024 and sell it today you would earn a total of  7,581  from holding Pertamina Geothermal Energy or generate 9.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	94.67%
Values	Daily Returns

Grand Kartech Tbk  vs.  Pertamina Geothermal Energy

Grand Kartech Tbk

Risk-Adjusted Performance

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Very Weak

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

Pertamina Geothermal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pertamina Geothermal Energy 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 Grand Kartech and Pertamina Geothermal

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

The idea behind Grand Kartech Tbk and Pertamina Geothermal Energy 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.