Correlation Between Guna Timur and Adi Sarana

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

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

Diversification Opportunities for Guna Timur and Adi Sarana

-0.84

Correlation Coefficient

Guna Timur  Adi Sarana

Pay attention - limited upside

The 3 months correlation between Guna and Adi is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Guna Timur Raya and Adi Sarana Armada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adi Sarana Armada and Guna Timur 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 Guna Timur Raya are associated (or correlated) with Adi Sarana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adi Sarana Armada has no effect on the direction of Guna Timur i.e., Guna Timur and Adi Sarana go up and down completely randomly.

Pair Corralation between Guna Timur and Adi Sarana

Assuming the 90 days trading horizon Guna Timur Raya is expected to generate 0.98 times more return on investment than Adi Sarana. However, Guna Timur Raya is 1.02 times less risky than Adi Sarana. It trades about 0.21 of its potential returns per unit of risk. Adi Sarana Armada is currently generating about -0.15 per unit of risk. If you would invest  8,300  in Guna Timur Raya on December 19, 2024 and sell it today you would earn a total of  2,400  from holding Guna Timur Raya or generate 28.92% return on investment over 90 days.

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

Guna Timur Raya  vs.  Adi Sarana Armada

Guna Timur Raya

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guna Timur Raya are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Guna Timur disclosed solid returns over the last few months and may actually be approaching a breakup point.

Adi Sarana Armada

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adi Sarana Armada 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Guna Timur and Adi Sarana

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

The idea behind Guna Timur Raya and Adi Sarana Armada 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.