Correlation Between Garuda Metalindo and Indointernet Tbk
Can any of the company-specific risk be diversified away by investing in both Garuda Metalindo and Indointernet Tbk 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 Indointernet Tbk 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 Indointernet Tbk PT, you can compare the effects of market volatilities on Garuda Metalindo and Indointernet Tbk 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 Indointernet Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garuda Metalindo and Indointernet Tbk.
Diversification Opportunities for Garuda Metalindo and Indointernet Tbk
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Garuda and Indointernet is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Metalindo Tbk and Indointernet Tbk PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indointernet 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 Indointernet Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indointernet Tbk has no effect on the direction of Garuda Metalindo i.e., Garuda Metalindo and Indointernet Tbk go up and down completely randomly.
Pair Corralation between Garuda Metalindo and Indointernet Tbk
Assuming the 90 days trading horizon Garuda Metalindo is expected to generate 13.77 times less return on investment than Indointernet Tbk. But when comparing it to its historical volatility, Garuda Metalindo Tbk is 21.81 times less risky than Indointernet Tbk. It trades about 0.07 of its potential returns per unit of risk. Indointernet Tbk PT is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 404,000 in Indointernet Tbk PT on September 2, 2024 and sell it today you would lose (7,000) from holding Indointernet Tbk PT or give up 1.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Garuda Metalindo Tbk vs. Indointernet Tbk PT
Performance |
| Timeline |
| Garuda Metalindo Tbk |
| Indointernet Tbk |
Garuda Metalindo and Indointernet Tbk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garuda Metalindo and Indointernet Tbk
The main advantage of trading using opposite Garuda Metalindo and Indointernet Tbk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garuda Metalindo position performs unexpectedly, Indointernet Tbk 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 Indointernet Tbk will offset losses from the drop in Indointernet Tbk's long position.| Garuda Metalindo vs. Matahari Department Store | Garuda Metalindo vs. Multi Medika Internasional | Garuda Metalindo vs. Visi Media Asia | Garuda Metalindo vs. Bayan Resources Tbk |
| Indointernet Tbk vs. Multipolar Technology Tbk | Indointernet Tbk vs. Digital Mediatama Maxima | Indointernet Tbk vs. NFC Indonesia PT | Indointernet Tbk vs. Kioson Komersial Indonesia |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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