Correlation Between Garuda Metalindo and Steel Pipe
Can any of the company-specific risk be diversified away by investing in both Garuda Metalindo and Steel Pipe 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 Steel Pipe 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 Steel Pipe Industry, you can compare the effects of market volatilities on Garuda Metalindo and Steel Pipe 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 Steel Pipe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garuda Metalindo and Steel Pipe.
Diversification Opportunities for Garuda Metalindo and Steel Pipe
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Garuda and Steel is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Metalindo Tbk and Steel Pipe Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Pipe Industry 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 Steel Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Pipe Industry has no effect on the direction of Garuda Metalindo i.e., Garuda Metalindo and Steel Pipe go up and down completely randomly.
Pair Corralation between Garuda Metalindo and Steel Pipe
Assuming the 90 days trading horizon Garuda Metalindo Tbk is expected to generate 1.36 times more return on investment than Steel Pipe. However, Garuda Metalindo is 1.36 times more volatile than Steel Pipe Industry. It trades about 0.05 of its potential returns per unit of risk. Steel Pipe Industry is currently generating about 0.03 per unit of risk. If you would invest 73,960 in Garuda Metalindo Tbk on August 29, 2024 and sell it today you would earn a total of 41,540 from holding Garuda Metalindo Tbk or generate 56.17% 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. Steel Pipe Industry
Performance |
| Timeline |
| Garuda Metalindo Tbk |
| Steel Pipe Industry |
Garuda Metalindo and Steel Pipe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garuda Metalindo and Steel Pipe
The main advantage of trading using opposite Garuda Metalindo and Steel Pipe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garuda Metalindo position performs unexpectedly, Steel Pipe 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 Steel Pipe will offset losses from the drop in Steel Pipe's long position.| Garuda Metalindo vs. Pelayaran Nelly Dwi | Garuda Metalindo vs. Buana Listya Tama | Garuda Metalindo vs. Mitrabahtera Segara Sejati | Garuda Metalindo vs. Trans Power Marine |
| Steel Pipe vs. Barito Pacific Tbk | Steel Pipe vs. Charoen Pokphand Indonesia | Steel Pipe vs. Indocement Tunggal Prakarsa |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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