Correlation Between PT Barito and GuocoLand

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

By analyzing existing cross correlation between PT Barito Pacific and GuocoLand Limited, you can compare the effects of market volatilities on PT Barito and GuocoLand 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 Barito with a short position of GuocoLand. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Barito and GuocoLand.

Diversification Opportunities for PT Barito and GuocoLand

0.45

Correlation Coefficient

PT Barito  GuocoLand

Very weak diversification

The 3 months correlation between OB8 and GuocoLand is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding PT Barito Pacific and GuocoLand Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GuocoLand Limited and PT Barito 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 Barito Pacific are associated (or correlated) with GuocoLand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GuocoLand Limited has no effect on the direction of PT Barito i.e., PT Barito and GuocoLand go up and down completely randomly.

Pair Corralation between PT Barito and GuocoLand

Assuming the 90 days horizon PT Barito Pacific is expected to under-perform the GuocoLand. In addition to that, PT Barito is 18.97 times more volatile than GuocoLand Limited. It trades about -0.11 of its total potential returns per unit of risk. GuocoLand Limited is currently generating about 0.06 per unit of volatility. If you would invest  102.00  in GuocoLand Limited on December 29, 2024 and sell it today you would earn a total of  1.00  from holding GuocoLand Limited or generate 0.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

PT Barito Pacific  vs.  GuocoLand Limited

PT Barito Pacific

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Barito Pacific has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

GuocoLand Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GuocoLand Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GuocoLand is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PT Barito and GuocoLand

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

The idea behind PT Barito Pacific and GuocoLand Limited 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.