Correlation Between Garuda Metalindo and Lini Imaji
Can any of the company-specific risk be diversified away by investing in both Garuda Metalindo and Lini Imaji 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 Lini Imaji 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 Lini Imaji Kreasi, you can compare the effects of market volatilities on Garuda Metalindo and Lini Imaji 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 Lini Imaji. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garuda Metalindo and Lini Imaji.
Diversification Opportunities for Garuda Metalindo and Lini Imaji
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Garuda and Lini is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Metalindo Tbk and Lini Imaji Kreasi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lini Imaji Kreasi 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 Lini Imaji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lini Imaji Kreasi has no effect on the direction of Garuda Metalindo i.e., Garuda Metalindo and Lini Imaji go up and down completely randomly.
Pair Corralation between Garuda Metalindo and Lini Imaji
Assuming the 90 days trading horizon Garuda Metalindo is expected to generate 1.53 times less return on investment than Lini Imaji. But when comparing it to its historical volatility, Garuda Metalindo Tbk is 2.81 times less risky than Lini Imaji. It trades about 0.07 of its potential returns per unit of risk. Lini Imaji Kreasi is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10,000 in Lini Imaji Kreasi on September 3, 2024 and sell it today you would earn a total of 3,500 from holding Lini Imaji Kreasi or generate 35.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 93.13% |
| Values | Daily Returns |
Garuda Metalindo Tbk vs. Lini Imaji Kreasi
Performance |
| Timeline |
| Garuda Metalindo Tbk |
| Lini Imaji Kreasi |
Garuda Metalindo and Lini Imaji Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garuda Metalindo and Lini Imaji
The main advantage of trading using opposite Garuda Metalindo and Lini Imaji positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garuda Metalindo position performs unexpectedly, Lini Imaji 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 Lini Imaji will offset losses from the drop in Lini Imaji's long position.| Garuda Metalindo vs. Intanwijaya Internasional Tbk | Garuda Metalindo vs. Champion Pacific Indonesia | Garuda Metalindo vs. Mitra Pinasthika Mustika | Garuda Metalindo vs. Jakarta Int Hotels |
| Lini Imaji vs. Global Mediacom Tbk | Lini Imaji vs. Hero Supermarket Tbk | Lini Imaji vs. Diamond Food Indonesia | Lini Imaji vs. Capital Financial 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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