Correlation Between Garuda Metalindo and PT Indonesia
Can any of the company-specific risk be diversified away by investing in both Garuda Metalindo and PT 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 Garuda Metalindo and PT Indonesia 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 PT Indonesia Kendaraan, you can compare the effects of market volatilities on Garuda Metalindo and PT 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 Garuda Metalindo with a short position of PT Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garuda Metalindo and PT Indonesia.
Diversification Opportunities for Garuda Metalindo and PT Indonesia
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Garuda and IPCC is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Metalindo Tbk and PT Indonesia Kendaraan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indonesia Kendaraan 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 PT Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indonesia Kendaraan has no effect on the direction of Garuda Metalindo i.e., Garuda Metalindo and PT Indonesia go up and down completely randomly.
Pair Corralation between Garuda Metalindo and PT Indonesia
Assuming the 90 days trading horizon Garuda Metalindo Tbk is expected to generate 0.92 times more return on investment than PT Indonesia. However, Garuda Metalindo Tbk is 1.08 times less risky than PT Indonesia. It trades about 0.33 of its potential returns per unit of risk. PT Indonesia Kendaraan is currently generating about 0.01 per unit of risk. If you would invest 114,000 in Garuda Metalindo Tbk on September 18, 2024 and sell it today you would earn a total of 15,000 from holding Garuda Metalindo Tbk or generate 13.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Garuda Metalindo Tbk vs. PT Indonesia Kendaraan
Performance |
| Timeline |
| Garuda Metalindo Tbk |
| PT Indonesia Kendaraan |
Garuda Metalindo and PT Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garuda Metalindo and PT Indonesia
The main advantage of trading using opposite Garuda Metalindo and PT Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garuda Metalindo position performs unexpectedly, PT 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 PT Indonesia will offset losses from the drop in PT Indonesia's long position.| Garuda Metalindo vs. PT Indonesia Kendaraan | Garuda Metalindo vs. Surya Toto Indonesia | Garuda Metalindo vs. Mitra Pinasthika Mustika | Garuda Metalindo vs. Integra Indocabinet Tbk |
| PT Indonesia vs. Jasa Armada Indonesia | PT Indonesia vs. Cikarang Listrindo Tbk | PT Indonesia vs. Mitra Pinasthika Mustika | PT Indonesia vs. Wijaya Karya Bangunan |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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