Correlation Between Garuda Metalindo and Bayu Buana
Can any of the company-specific risk be diversified away by investing in both Garuda Metalindo and Bayu Buana 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 Garuda Metalindo and Bayu Buana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Garuda Metalindo Tbk and Bayu Buana Tbk, you can compare the effects of market volatilities on Garuda Metalindo and Bayu Buana 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 Garuda Metalindo with a short position of Bayu Buana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garuda Metalindo and Bayu Buana.
Diversification Opportunities for Garuda Metalindo and Bayu Buana
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Garuda and Bayu is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Metalindo Tbk and Bayu Buana Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayu Buana Tbk and Garuda Metalindo 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 Garuda Metalindo Tbk are associated (or correlated) with Bayu Buana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayu Buana Tbk has no effect on the direction of Garuda Metalindo i.e., Garuda Metalindo and Bayu Buana go up and down completely randomly.
Pair Corralation between Garuda Metalindo and Bayu Buana
If you would invest 0.00 in Bayu Buana Tbk on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Bayu Buana Tbk or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Garuda Metalindo Tbk vs. Bayu Buana Tbk
Performance |
| Timeline |
| Garuda Metalindo Tbk |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Bayu Buana Tbk |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Garuda Metalindo and Bayu Buana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garuda Metalindo and Bayu Buana
The main advantage of trading using opposite Garuda Metalindo and Bayu Buana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garuda Metalindo position performs unexpectedly, Bayu Buana 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 Bayu Buana will offset losses from the drop in Bayu Buana's long position.The idea behind Garuda Metalindo Tbk and Bayu Buana 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.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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