Correlation Between Grasim Industries and PT Semen

Can any of the company-specific risk be diversified away by investing in both Grasim Industries and PT Semen 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 Grasim Industries and PT Semen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grasim Industries Limited and PT Semen Indonesia, you can compare the effects of market volatilities on Grasim Industries and PT Semen 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 Grasim Industries with a short position of PT Semen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grasim Industries and PT Semen.

Diversification Opportunities for Grasim Industries and PT Semen

0.0

Correlation Coefficient

Grasim Industries  PT Semen

Pay attention - limited upside

The 3 months correlation between Grasim and PSGTF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Grasim Industries Limited and PT Semen Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Semen Indonesia and Grasim Industries 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 Grasim Industries Limited are associated (or correlated) with PT Semen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Semen Indonesia has no effect on the direction of Grasim Industries i.e., Grasim Industries and PT Semen go up and down completely randomly.

Pair Corralation between Grasim Industries and PT Semen

If you would invest  1,961  in Grasim Industries Limited on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Grasim Industries Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Grasim Industries Limited  vs.  PT Semen Indonesia

Grasim Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grasim Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Grasim Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PT Semen Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Semen Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Grasim Industries and PT Semen

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

The idea behind Grasim Industries Limited and PT Semen Indonesia 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.