Correlation Between Walgreens Boots and GUDANG GARAM

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

By analyzing existing cross correlation between Walgreens Boots Alliance and GUDANG GARAM, you can compare the effects of market volatilities on Walgreens Boots and GUDANG GARAM 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 Walgreens Boots with a short position of GUDANG GARAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and GUDANG GARAM.

Diversification Opportunities for Walgreens Boots and GUDANG GARAM

-0.41

Correlation Coefficient

Walgreens Boots  GUDANG GARAM

Very good diversification

The 3 months correlation between Walgreens and GUDANG is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and GUDANG GARAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUDANG GARAM and Walgreens Boots 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 Walgreens Boots Alliance are associated (or correlated) with GUDANG GARAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUDANG GARAM has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and GUDANG GARAM go up and down completely randomly.

Pair Corralation between Walgreens Boots and GUDANG GARAM

Assuming the 90 days horizon Walgreens Boots Alliance is expected to generate 1.09 times more return on investment than GUDANG GARAM. However, Walgreens Boots is 1.09 times more volatile than GUDANG GARAM. It trades about 0.03 of its potential returns per unit of risk. GUDANG GARAM is currently generating about -0.12 per unit of risk. If you would invest  1,014  in Walgreens Boots Alliance on December 2, 2024 and sell it today you would earn a total of  10.00  from holding Walgreens Boots Alliance or generate 0.99% return on investment over 90 days.

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

Walgreens Boots Alliance  vs.  GUDANG GARAM

Walgreens Boots Alliance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Walgreens Boots reported solid returns over the last few months and may actually be approaching a breakup point.

GUDANG GARAM

Risk-Adjusted Performance

Very Weak

Over the last 90 days GUDANG GARAM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Walgreens Boots and GUDANG GARAM

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

The idea behind Walgreens Boots Alliance and GUDANG GARAM 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.