Correlation Between Gaya Abadi and PT Sunter

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

By analyzing existing cross correlation between Gaya Abadi Sempurna and PT Sunter Lakeside, you can compare the effects of market volatilities on Gaya Abadi and PT Sunter 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 Gaya Abadi with a short position of PT Sunter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaya Abadi and PT Sunter.

Diversification Opportunities for Gaya Abadi and PT Sunter

0.24

Correlation Coefficient

Gaya Abadi  PT Sunter

Modest diversification

The 3 months correlation between Gaya and SNLK is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Gaya Abadi Sempurna and PT Sunter Lakeside in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Sunter Lakeside and Gaya Abadi 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 Gaya Abadi Sempurna are associated (or correlated) with PT Sunter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Sunter Lakeside has no effect on the direction of Gaya Abadi i.e., Gaya Abadi and PT Sunter go up and down completely randomly.

Pair Corralation between Gaya Abadi and PT Sunter

Assuming the 90 days trading horizon Gaya Abadi is expected to generate 4.78 times less return on investment than PT Sunter. But when comparing it to its historical volatility, Gaya Abadi Sempurna is 1.9 times less risky than PT Sunter. It trades about 0.01 of its potential returns per unit of risk. PT Sunter Lakeside is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  66,000  in PT Sunter Lakeside on September 1, 2024 and sell it today you would earn a total of  2,500  from holding PT Sunter Lakeside or generate 3.79% return on investment over 90 days.

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

Gaya Abadi Sempurna  vs.  PT Sunter Lakeside

Gaya Abadi Sempurna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gaya Abadi Sempurna has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

PT Sunter Lakeside

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PT Sunter Lakeside are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Sunter disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gaya Abadi and PT Sunter

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

The idea behind Gaya Abadi Sempurna and PT Sunter Lakeside 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.