Correlation Between Walker Dunlop and Cemindo Gemilang

Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and Cemindo Gemilang 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 Walker Dunlop and Cemindo Gemilang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walker Dunlop and Cemindo Gemilang Tbk, you can compare the effects of market volatilities on Walker Dunlop and Cemindo Gemilang 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 Walker Dunlop with a short position of Cemindo Gemilang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and Cemindo Gemilang.

Diversification Opportunities for Walker Dunlop and Cemindo Gemilang

0.43

Correlation Coefficient

Walker Dunlop  Cemindo Gemilang

Very weak diversification

The 3 months correlation between Walker and Cemindo is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Cemindo Gemilang Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cemindo Gemilang Tbk and Walker Dunlop 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 Walker Dunlop are associated (or correlated) with Cemindo Gemilang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cemindo Gemilang Tbk has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Cemindo Gemilang go up and down completely randomly.

Pair Corralation between Walker Dunlop and Cemindo Gemilang

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the Cemindo Gemilang. But the stock apears to be less risky and, when comparing its historical volatility, Walker Dunlop is 1.21 times less risky than Cemindo Gemilang. The stock trades about -0.08 of its potential returns per unit of risk. The Cemindo Gemilang Tbk is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  88,000  in Cemindo Gemilang Tbk on December 29, 2024 and sell it today you would earn a total of  2,000  from holding Cemindo Gemilang Tbk or generate 2.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Walker Dunlop  vs.  Cemindo Gemilang Tbk

Walker Dunlop

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walker Dunlop has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Cemindo Gemilang Tbk

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cemindo Gemilang Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Cemindo Gemilang 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 Walker Dunlop and Cemindo Gemilang

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

The idea behind Walker Dunlop and Cemindo Gemilang Tbk 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.