Correlation Between Guna Timur and Krida Jaringan

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

Diversification Opportunities for Guna Timur and Krida Jaringan

0.32

Correlation Coefficient

Guna Timur  Krida Jaringan

Weak diversification

The 3 months correlation between Guna and Krida is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Guna Timur Raya and Krida Jaringan Nusantara in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krida Jaringan Nusantara 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 Krida Jaringan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krida Jaringan Nusantara has no effect on the direction of Guna Timur i.e., Guna Timur and Krida Jaringan go up and down completely randomly.

Pair Corralation between Guna Timur and Krida Jaringan

Assuming the 90 days trading horizon Guna Timur is expected to generate 2.71 times less return on investment than Krida Jaringan. But when comparing it to its historical volatility, Guna Timur Raya is 5.25 times less risky than Krida Jaringan. It trades about 0.28 of its potential returns per unit of risk. Krida Jaringan Nusantara is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  6,800  in Krida Jaringan Nusantara on December 4, 2024 and sell it today you would earn a total of  5,700  from holding Krida Jaringan Nusantara or generate 83.82% return on investment over 90 days.

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

Guna Timur Raya  vs.  Krida Jaringan Nusantara

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 21 (%) 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.

Krida Jaringan Nusantara

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Krida Jaringan Nusantara are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Krida Jaringan disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guna Timur and Krida Jaringan

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

The idea behind Guna Timur Raya and Krida Jaringan Nusantara 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 Global Correlations module to find global opportunities by holding instruments from different markets.