Correlation Between PT Gajah and Essentra Plc
Can any of the company-specific risk be diversified away by investing in both PT Gajah and Essentra Plc 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 PT Gajah and Essentra Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Gajah Tunggal and Essentra plc, you can compare the effects of market volatilities on PT Gajah and Essentra Plc 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 PT Gajah with a short position of Essentra Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Gajah and Essentra Plc.
Diversification Opportunities for PT Gajah and Essentra Plc
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between GH8 and Essentra is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding PT Gajah Tunggal and Essentra plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essentra plc and PT Gajah 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 PT Gajah Tunggal are associated (or correlated) with Essentra Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essentra plc has no effect on the direction of PT Gajah i.e., PT Gajah and Essentra Plc go up and down completely randomly.
Pair Corralation between PT Gajah and Essentra Plc
Assuming the 90 days horizon PT Gajah Tunggal is expected to generate 4.67 times more return on investment than Essentra Plc. However, PT Gajah is 4.67 times more volatile than Essentra plc. It trades about 0.03 of its potential returns per unit of risk. Essentra plc is currently generating about -0.13 per unit of risk. If you would invest 6.30 in PT Gajah Tunggal on September 26, 2024 and sell it today you would lose (0.15) from holding PT Gajah Tunggal or give up 2.38% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
PT Gajah Tunggal vs. Essentra plc
Performance |
Timeline |
PT Gajah Tunggal |
Essentra plc |
PT Gajah and Essentra Plc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PT Gajah and Essentra Plc
The main advantage of trading using opposite PT Gajah and Essentra Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Gajah position performs unexpectedly, Essentra Plc 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 Essentra Plc will offset losses from the drop in Essentra Plc's long position.PT Gajah vs. Bridgestone | PT Gajah vs. Advanced Drainage Systems | PT Gajah vs. The Goodyear Tire | PT Gajah vs. Sumitomo Rubber Industries |
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Check out your portfolio center.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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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