Correlation Between Bank Jabar and Garuda Indonesia
Can any of the company-specific risk be diversified away by investing in both Bank Jabar and Garuda Indonesia 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 Bank Jabar and Garuda Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Jabar and Garuda Indonesia Persero, you can compare the effects of market volatilities on Bank Jabar and Garuda Indonesia 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 Bank Jabar with a short position of Garuda Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Jabar and Garuda Indonesia.
Diversification Opportunities for Bank Jabar and Garuda Indonesia
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Garuda is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Bank Jabar and Garuda Indonesia Persero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garuda Indonesia Persero and Bank Jabar 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 Bank Jabar are associated (or correlated) with Garuda Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garuda Indonesia Persero has no effect on the direction of Bank Jabar i.e., Bank Jabar and Garuda Indonesia go up and down completely randomly.
Pair Corralation between Bank Jabar and Garuda Indonesia
Assuming the 90 days trading horizon Bank Jabar is expected to generate 0.26 times more return on investment than Garuda Indonesia. However, Bank Jabar is 3.92 times less risky than Garuda Indonesia. It trades about -0.16 of its potential returns per unit of risk. Garuda Indonesia Persero is currently generating about -0.06 per unit of risk. If you would invest 97,500 in Bank Jabar on August 31, 2024 and sell it today you would lose (2,500) from holding Bank Jabar or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Jabar vs. Garuda Indonesia Persero
Performance |
| Timeline |
| Bank Jabar |
| Garuda Indonesia Persero |
Bank Jabar and Garuda Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Jabar and Garuda Indonesia
The main advantage of trading using opposite Bank Jabar and Garuda Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Jabar position performs unexpectedly, Garuda Indonesia 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 Indonesia will offset losses from the drop in Garuda Indonesia's long position.| Bank Jabar vs. Bank Pembangunan Timur | Bank Jabar vs. Bank Tabungan Negara | Bank Jabar vs. Bank Danamon Indonesia | Bank Jabar vs. Bumi Serpong Damai |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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