Correlation Between Guna Timur and Cahayaputra Asa

Can any of the company-specific risk be diversified away by investing in both Guna Timur and Cahayaputra Asa 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 Cahayaputra Asa 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 Cahayaputra Asa Keramik, you can compare the effects of market volatilities on Guna Timur and Cahayaputra Asa 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 Cahayaputra Asa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guna Timur and Cahayaputra Asa.

Diversification Opportunities for Guna Timur and Cahayaputra Asa

0.57

Correlation Coefficient

Guna Timur  Cahayaputra Asa

Very weak diversification

The 3 months correlation between Guna and Cahayaputra is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Guna Timur Raya and Cahayaputra Asa Keramik in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cahayaputra Asa Keramik 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 Cahayaputra Asa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cahayaputra Asa Keramik has no effect on the direction of Guna Timur i.e., Guna Timur and Cahayaputra Asa go up and down completely randomly.

Pair Corralation between Guna Timur and Cahayaputra Asa

Assuming the 90 days trading horizon Guna Timur Raya is expected to generate 2.14 times more return on investment than Cahayaputra Asa. However, Guna Timur is 2.14 times more volatile than Cahayaputra Asa Keramik. It trades about -0.02 of its potential returns per unit of risk. Cahayaputra Asa Keramik is currently generating about -0.05 per unit of risk. If you would invest  10,900  in Guna Timur Raya on October 26, 2024 and sell it today you would lose (1,100) from holding Guna Timur Raya or give up 10.09% of portfolio value over 90 days.

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

Guna Timur Raya  vs.  Cahayaputra Asa Keramik

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 quite persistent forward-looking signals, Guna Timur is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Cahayaputra Asa Keramik

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Guna Timur and Cahayaputra Asa

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

The idea behind Guna Timur Raya and Cahayaputra Asa Keramik 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.