Correlation Between Alumindo Light and Garuda Metalindo
Can any of the company-specific risk be diversified away by investing in both Alumindo Light and Garuda Metalindo 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 Alumindo Light and Garuda Metalindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alumindo Light Metal and Garuda Metalindo Tbk, you can compare the effects of market volatilities on Alumindo Light and Garuda Metalindo 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 Alumindo Light with a short position of Garuda Metalindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alumindo Light and Garuda Metalindo.
Diversification Opportunities for Alumindo Light and Garuda Metalindo
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alumindo and Garuda is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Alumindo Light Metal and Garuda Metalindo Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garuda Metalindo Tbk and Alumindo Light 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 Alumindo Light Metal are associated (or correlated) with Garuda Metalindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garuda Metalindo Tbk has no effect on the direction of Alumindo Light i.e., Alumindo Light and Garuda Metalindo go up and down completely randomly.
Pair Corralation between Alumindo Light and Garuda Metalindo
Assuming the 90 days trading horizon Alumindo Light Metal is expected to under-perform the Garuda Metalindo. In addition to that, Alumindo Light is 2.19 times more volatile than Garuda Metalindo Tbk. It trades about -0.07 of its total potential returns per unit of risk. Garuda Metalindo Tbk is currently generating about 0.08 per unit of volatility. If you would invest 83,635 in Garuda Metalindo Tbk on September 1, 2024 and sell it today you would earn a total of 38,365 from holding Garuda Metalindo Tbk or generate 45.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alumindo Light Metal vs. Garuda Metalindo Tbk
Performance |
| Timeline |
| Alumindo Light Metal |
| Garuda Metalindo Tbk |
Alumindo Light and Garuda Metalindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alumindo Light and Garuda Metalindo
The main advantage of trading using opposite Alumindo Light and Garuda Metalindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alumindo Light position performs unexpectedly, Garuda Metalindo 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 Garuda Metalindo will offset losses from the drop in Garuda Metalindo's long position.| Alumindo Light vs. Perusahaan Gas Negara | Alumindo Light vs. Telkom Indonesia Tbk | Alumindo Light vs. Mitra Pinasthika Mustika | Alumindo Light vs. Jakarta Int Hotels |
| Garuda Metalindo vs. Matahari Department Store | Garuda Metalindo vs. Multi Medika Internasional | Garuda Metalindo vs. Visi Media Asia | Garuda Metalindo vs. Bayan Resources Tbk |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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