Correlation Between Gaya Abadi and Makmur Berkah

Can any of the company-specific risk be diversified away by investing in both Gaya Abadi and Makmur Berkah 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 Gaya Abadi and Makmur Berkah into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gaya Abadi Sempurna and Makmur Berkah Amanda, you can compare the effects of market volatilities on Gaya Abadi and Makmur Berkah 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 Gaya Abadi with a short position of Makmur Berkah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaya Abadi and Makmur Berkah.

Diversification Opportunities for Gaya Abadi and Makmur Berkah

0.48

Correlation Coefficient

Gaya Abadi  Makmur Berkah

Very weak diversification

The 3 months correlation between Gaya and Makmur is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Gaya Abadi Sempurna and Makmur Berkah Amanda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Makmur Berkah Amanda and Gaya Abadi 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 Gaya Abadi Sempurna are associated (or correlated) with Makmur Berkah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Makmur Berkah Amanda has no effect on the direction of Gaya Abadi i.e., Gaya Abadi and Makmur Berkah go up and down completely randomly.

Pair Corralation between Gaya Abadi and Makmur Berkah

Assuming the 90 days trading horizon Gaya Abadi Sempurna is expected to under-perform the Makmur Berkah. In addition to that, Gaya Abadi is 1.27 times more volatile than Makmur Berkah Amanda. It trades about -0.14 of its total potential returns per unit of risk. Makmur Berkah Amanda is currently generating about -0.01 per unit of volatility. If you would invest  11,400  in Makmur Berkah Amanda on September 13, 2024 and sell it today you would lose (100.00) from holding Makmur Berkah Amanda or give up 0.88% of portfolio value over 90 days.

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

Gaya Abadi Sempurna  vs.  Makmur Berkah Amanda

Gaya Abadi Sempurna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gaya Abadi Sempurna 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.

Makmur Berkah Amanda

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Makmur Berkah Amanda has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Makmur Berkah is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Gaya Abadi and Makmur Berkah

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

The idea behind Gaya Abadi Sempurna and Makmur Berkah Amanda 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.