Correlation Between Garuda Metalindo and Gunawan Dianjaya
Can any of the company-specific risk be diversified away by investing in both Garuda Metalindo and Gunawan Dianjaya 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 Gunawan Dianjaya 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 Gunawan Dianjaya Steel, you can compare the effects of market volatilities on Garuda Metalindo and Gunawan Dianjaya 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 Gunawan Dianjaya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garuda Metalindo and Gunawan Dianjaya.
Diversification Opportunities for Garuda Metalindo and Gunawan Dianjaya
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Garuda and Gunawan is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Metalindo Tbk and Gunawan Dianjaya Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gunawan Dianjaya Steel 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 Gunawan Dianjaya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gunawan Dianjaya Steel has no effect on the direction of Garuda Metalindo i.e., Garuda Metalindo and Gunawan Dianjaya go up and down completely randomly.
Pair Corralation between Garuda Metalindo and Gunawan Dianjaya
Assuming the 90 days trading horizon Garuda Metalindo Tbk is expected to generate 0.65 times more return on investment than Gunawan Dianjaya. However, Garuda Metalindo Tbk is 1.55 times less risky than Gunawan Dianjaya. It trades about 0.12 of its potential returns per unit of risk. Gunawan Dianjaya Steel is currently generating about -0.28 per unit of risk. If you would invest 112,000 in Garuda Metalindo Tbk on August 31, 2024 and sell it today you would earn a total of 7,000 from holding Garuda Metalindo Tbk or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Garuda Metalindo Tbk vs. Gunawan Dianjaya Steel
Performance |
| Timeline |
| Garuda Metalindo Tbk |
| Gunawan Dianjaya Steel |
Garuda Metalindo and Gunawan Dianjaya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garuda Metalindo and Gunawan Dianjaya
The main advantage of trading using opposite Garuda Metalindo and Gunawan Dianjaya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garuda Metalindo position performs unexpectedly, Gunawan Dianjaya 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 Gunawan Dianjaya will offset losses from the drop in Gunawan Dianjaya's long position.| Garuda Metalindo vs. Indo Kordsa Tbk | Garuda Metalindo vs. Indospring Tbk | Garuda Metalindo vs. Kabelindo Murni Tbk | Garuda Metalindo vs. Blue Bird Tbk |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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