Correlation Between Garuda Metalindo and Pertamina Geothermal
Can any of the company-specific risk be diversified away by investing in both Garuda Metalindo and Pertamina Geothermal 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 Pertamina Geothermal 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 Pertamina Geothermal Energy, you can compare the effects of market volatilities on Garuda Metalindo and Pertamina Geothermal 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 Pertamina Geothermal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garuda Metalindo and Pertamina Geothermal.
Diversification Opportunities for Garuda Metalindo and Pertamina Geothermal
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Garuda and Pertamina is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Metalindo Tbk and Pertamina Geothermal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pertamina Geothermal 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 Pertamina Geothermal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pertamina Geothermal has no effect on the direction of Garuda Metalindo i.e., Garuda Metalindo and Pertamina Geothermal go up and down completely randomly.
Pair Corralation between Garuda Metalindo and Pertamina Geothermal
Assuming the 90 days trading horizon Garuda Metalindo is expected to generate 5.38 times less return on investment than Pertamina Geothermal. But when comparing it to its historical volatility, Garuda Metalindo Tbk is 2.38 times less risky than Pertamina Geothermal. It trades about 0.02 of its potential returns per unit of risk. Pertamina Geothermal Energy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 94,000 in Pertamina Geothermal Energy on November 3, 2024 and sell it today you would earn a total of 2,000 from holding Pertamina Geothermal Energy or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Garuda Metalindo Tbk vs. Pertamina Geothermal Energy
Performance |
| Timeline |
| Garuda Metalindo Tbk |
| Pertamina Geothermal |
Garuda Metalindo and Pertamina Geothermal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garuda Metalindo and Pertamina Geothermal
The main advantage of trading using opposite Garuda Metalindo and Pertamina Geothermal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garuda Metalindo position performs unexpectedly, Pertamina Geothermal 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 Pertamina Geothermal will offset losses from the drop in Pertamina Geothermal'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 |
| Pertamina Geothermal vs. Bank Ocbc Nisp | Pertamina Geothermal vs. Weha Transportasi Indonesia | Pertamina Geothermal vs. Wintermar Offshore Marine |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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