Correlation Between Gunawan Dianjaya and Polychem Indonesia

Can any of the company-specific risk be diversified away by investing in both Gunawan Dianjaya and Polychem Indonesia 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 Gunawan Dianjaya and Polychem Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gunawan Dianjaya Steel and Polychem Indonesia Tbk, you can compare the effects of market volatilities on Gunawan Dianjaya and Polychem Indonesia 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 Gunawan Dianjaya with a short position of Polychem Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gunawan Dianjaya and Polychem Indonesia.

Diversification Opportunities for Gunawan Dianjaya and Polychem Indonesia

0.03

Correlation Coefficient

Gunawan Dianjaya  Polychem Indonesia

Significant diversification

The 3 months correlation between Gunawan and Polychem is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Gunawan Dianjaya Steel and Polychem Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polychem Indonesia Tbk and Gunawan Dianjaya 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 Gunawan Dianjaya Steel are associated (or correlated) with Polychem Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polychem Indonesia Tbk has no effect on the direction of Gunawan Dianjaya i.e., Gunawan Dianjaya and Polychem Indonesia go up and down completely randomly.

Pair Corralation between Gunawan Dianjaya and Polychem Indonesia

Assuming the 90 days trading horizon Gunawan Dianjaya Steel is expected to generate 1.48 times more return on investment than Polychem Indonesia. However, Gunawan Dianjaya is 1.48 times more volatile than Polychem Indonesia Tbk. It trades about 0.01 of its potential returns per unit of risk. Polychem Indonesia Tbk is currently generating about -0.32 per unit of risk. If you would invest  9,900  in Gunawan Dianjaya Steel on February 4, 2024 and sell it today you would earn a total of  0.00  from holding Gunawan Dianjaya Steel or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Gunawan Dianjaya Steel  vs.  Polychem Indonesia Tbk

Gunawan Dianjaya Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gunawan Dianjaya Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Polychem Indonesia Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polychem Indonesia Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Gunawan Dianjaya and Polychem Indonesia

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

The idea behind Gunawan Dianjaya Steel and Polychem Indonesia 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.