Correlation Between Gozco Plantations and Bisi International

Can any of the company-specific risk be diversified away by investing in both Gozco Plantations and Bisi International 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 Gozco Plantations and Bisi International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gozco Plantations Tbk and Bisi International Tbk, you can compare the effects of market volatilities on Gozco Plantations and Bisi International 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 Gozco Plantations with a short position of Bisi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gozco Plantations and Bisi International.

Diversification Opportunities for Gozco Plantations and Bisi International

-0.72

Correlation Coefficient

Gozco Plantations  Bisi International

Pay attention - limited upside

The 3 months correlation between Gozco and Bisi is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Gozco Plantations Tbk and Bisi International Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bisi International Tbk and Gozco Plantations 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 Gozco Plantations Tbk are associated (or correlated) with Bisi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bisi International Tbk has no effect on the direction of Gozco Plantations i.e., Gozco Plantations and Bisi International go up and down completely randomly.

Pair Corralation between Gozco Plantations and Bisi International

Assuming the 90 days trading horizon Gozco Plantations Tbk is expected to generate 1.04 times more return on investment than Bisi International. However, Gozco Plantations is 1.04 times more volatile than Bisi International Tbk. It trades about 0.08 of its potential returns per unit of risk. Bisi International Tbk is currently generating about -0.18 per unit of risk. If you would invest  9,000  in Gozco Plantations Tbk on September 18, 2024 and sell it today you would earn a total of  1,000.00  from holding Gozco Plantations Tbk or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Gozco Plantations Tbk  vs.  Bisi International Tbk

Gozco Plantations Tbk

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gozco Plantations Tbk are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Gozco Plantations may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bisi International Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bisi International 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 forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Gozco Plantations and Bisi International

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

The idea behind Gozco Plantations Tbk and Bisi International 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.