Correlation Between Gema Grahasarana and Akbar Indomakmur

Can any of the company-specific risk be diversified away by investing in both Gema Grahasarana and Akbar Indomakmur 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 Gema Grahasarana and Akbar Indomakmur into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gema Grahasarana Tbk and Akbar Indomakmur Stimec, you can compare the effects of market volatilities on Gema Grahasarana and Akbar Indomakmur 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 Gema Grahasarana with a short position of Akbar Indomakmur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gema Grahasarana and Akbar Indomakmur.

Diversification Opportunities for Gema Grahasarana and Akbar Indomakmur

0.39

Correlation Coefficient

Gema Grahasarana  Akbar Indomakmur

Weak diversification

The 3 months correlation between Gema and Akbar is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Gema Grahasarana Tbk and Akbar Indomakmur Stimec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akbar Indomakmur Stimec and Gema Grahasarana 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 Gema Grahasarana Tbk are associated (or correlated) with Akbar Indomakmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akbar Indomakmur Stimec has no effect on the direction of Gema Grahasarana i.e., Gema Grahasarana and Akbar Indomakmur go up and down completely randomly.

Pair Corralation between Gema Grahasarana and Akbar Indomakmur

Assuming the 90 days trading horizon Gema Grahasarana Tbk is expected to under-perform the Akbar Indomakmur. In addition to that, Gema Grahasarana is 1.01 times more volatile than Akbar Indomakmur Stimec. It trades about -0.04 of its total potential returns per unit of risk. Akbar Indomakmur Stimec is currently generating about -0.03 per unit of volatility. If you would invest  49,800  in Akbar Indomakmur Stimec on September 3, 2024 and sell it today you would lose (5,600) from holding Akbar Indomakmur Stimec or give up 11.24% of portfolio value over 90 days.

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

Gema Grahasarana Tbk  vs.  Akbar Indomakmur Stimec

Gema Grahasarana Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gema Grahasarana Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Akbar Indomakmur Stimec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akbar Indomakmur Stimec has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Gema Grahasarana and Akbar Indomakmur

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

The idea behind Gema Grahasarana Tbk and Akbar Indomakmur Stimec 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.