Correlation Between Garuda Metalindo and Indonesian Tobacco
Can any of the company-specific risk be diversified away by investing in both Garuda Metalindo and Indonesian Tobacco 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 Indonesian Tobacco 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 Indonesian Tobacco Tbk, you can compare the effects of market volatilities on Garuda Metalindo and Indonesian Tobacco 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 Indonesian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garuda Metalindo and Indonesian Tobacco.
Diversification Opportunities for Garuda Metalindo and Indonesian Tobacco
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Garuda and Indonesian is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Metalindo Tbk and Indonesian Tobacco Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indonesian Tobacco 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 Indonesian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indonesian Tobacco Tbk has no effect on the direction of Garuda Metalindo i.e., Garuda Metalindo and Indonesian Tobacco go up and down completely randomly.
Pair Corralation between Garuda Metalindo and Indonesian Tobacco
Assuming the 90 days trading horizon Garuda Metalindo is expected to generate 1.44 times less return on investment than Indonesian Tobacco. In addition to that, Garuda Metalindo is 1.6 times more volatile than Indonesian Tobacco Tbk. It trades about 0.02 of its total potential returns per unit of risk. Indonesian Tobacco Tbk is currently generating about 0.05 per unit of volatility. If you would invest 24,800 in Indonesian Tobacco Tbk on November 3, 2024 and sell it today you would earn a total of 200.00 from holding Indonesian Tobacco Tbk or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Garuda Metalindo Tbk vs. Indonesian Tobacco Tbk
Performance |
| Timeline |
| Garuda Metalindo Tbk |
| Indonesian Tobacco Tbk |
Garuda Metalindo and Indonesian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garuda Metalindo and Indonesian Tobacco
The main advantage of trading using opposite Garuda Metalindo and Indonesian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garuda Metalindo position performs unexpectedly, Indonesian Tobacco 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 Indonesian Tobacco will offset losses from the drop in Indonesian Tobacco'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 |
| Indonesian Tobacco vs. Wismilak Inti Makmur | Indonesian Tobacco vs. J Resources Asia | Indonesian Tobacco vs. Transcoal Pacific Tbk | Indonesian Tobacco vs. Garudafood Putra Putri |
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 CEOs Directory module to screen CEOs from public companies around the world.
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