Correlation Between Sepatu Bata and Goodyear Indonesia
Can any of the company-specific risk be diversified away by investing in both Sepatu Bata and Goodyear 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 Sepatu Bata and Goodyear Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sepatu Bata Tbk and Goodyear Indonesia Tbk, you can compare the effects of market volatilities on Sepatu Bata and Goodyear 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 Sepatu Bata with a short position of Goodyear Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sepatu Bata and Goodyear Indonesia.
Diversification Opportunities for Sepatu Bata and Goodyear Indonesia
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sepatu and Goodyear is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sepatu Bata Tbk and Goodyear Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodyear Indonesia Tbk and Sepatu Bata 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 Sepatu Bata Tbk are associated (or correlated) with Goodyear Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodyear Indonesia Tbk has no effect on the direction of Sepatu Bata i.e., Sepatu Bata and Goodyear Indonesia go up and down completely randomly.
Pair Corralation between Sepatu Bata and Goodyear Indonesia
Assuming the 90 days trading horizon Sepatu Bata Tbk is expected to under-perform the Goodyear Indonesia. But the stock apears to be less risky and, when comparing its historical volatility, Sepatu Bata Tbk is 1.29 times less risky than Goodyear Indonesia. The stock trades about -0.15 of its potential returns per unit of risk. The Goodyear Indonesia Tbk is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 143,000 in Goodyear Indonesia Tbk on September 15, 2024 and sell it today you would earn a total of 5,000 from holding Goodyear Indonesia Tbk or generate 3.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sepatu Bata Tbk vs. Goodyear Indonesia Tbk
Performance |
Timeline |
Sepatu Bata Tbk |
Goodyear Indonesia Tbk |
Sepatu Bata and Goodyear Indonesia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sepatu Bata and Goodyear Indonesia
The main advantage of trading using opposite Sepatu Bata and Goodyear Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sepatu Bata position performs unexpectedly, Goodyear 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 Goodyear Indonesia will offset losses from the drop in Goodyear Indonesia's long position.Sepatu Bata vs. Pembangunan Graha Lestari | Sepatu Bata vs. Pembangunan Jaya Ancol | Sepatu Bata vs. Hotel Sahid Jaya | Sepatu Bata vs. Mitrabara Adiperdana PT |
Goodyear Indonesia vs. Pembangunan Graha Lestari | Goodyear Indonesia vs. Pembangunan Jaya Ancol | Goodyear Indonesia vs. Hotel Sahid Jaya | Goodyear Indonesia vs. Mitrabara Adiperdana PT |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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