Correlation Between Goodyear Tire and PT Gajah

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

By analyzing existing cross correlation between The Goodyear Tire and PT Gajah Tunggal, you can compare the effects of market volatilities on Goodyear Tire and PT Gajah 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 Goodyear Tire with a short position of PT Gajah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and PT Gajah.

Diversification Opportunities for Goodyear Tire and PT Gajah

-0.49

Correlation Coefficient

Goodyear Tire  PT Gajah

Very good diversification

The 3 months correlation between Goodyear and GH8 is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding The Goodyear Tire and PT Gajah Tunggal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Gajah Tunggal and Goodyear Tire 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 The Goodyear Tire are associated (or correlated) with PT Gajah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Gajah Tunggal has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and PT Gajah go up and down completely randomly.

Pair Corralation between Goodyear Tire and PT Gajah

Assuming the 90 days horizon The Goodyear Tire is expected to generate 0.36 times more return on investment than PT Gajah. However, The Goodyear Tire is 2.81 times less risky than PT Gajah. It trades about 0.17 of its potential returns per unit of risk. PT Gajah Tunggal is currently generating about 0.02 per unit of risk. If you would invest  689.00  in The Goodyear Tire on September 12, 2024 and sell it today you would earn a total of  273.00  from holding The Goodyear Tire or generate 39.62% return on investment over 90 days.

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

The Goodyear Tire  vs.  PT Gajah Tunggal

Goodyear Tire

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days The Goodyear Tire has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Goodyear Tire reported solid returns over the last few months and may actually be approaching a breakup point.

PT Gajah Tunggal

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days PT Gajah Tunggal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, PT Gajah may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Goodyear Tire and PT Gajah

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

The idea behind The Goodyear Tire and PT Gajah Tunggal 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.