Correlation Between Garuda Metalindo and Victoria Insurance
Can any of the company-specific risk be diversified away by investing in both Garuda Metalindo and Victoria Insurance 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 Victoria Insurance 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 Victoria Insurance Tbk, you can compare the effects of market volatilities on Garuda Metalindo and Victoria Insurance 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 Victoria Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garuda Metalindo and Victoria Insurance.
Diversification Opportunities for Garuda Metalindo and Victoria Insurance
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Garuda and Victoria is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Metalindo Tbk and Victoria Insurance Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victoria Insurance 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 Victoria Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victoria Insurance Tbk has no effect on the direction of Garuda Metalindo i.e., Garuda Metalindo and Victoria Insurance go up and down completely randomly.
Pair Corralation between Garuda Metalindo and Victoria Insurance
Assuming the 90 days trading horizon Garuda Metalindo Tbk is expected to generate 1.3 times more return on investment than Victoria Insurance. However, Garuda Metalindo is 1.3 times more volatile than Victoria Insurance Tbk. It trades about 0.16 of its potential returns per unit of risk. Victoria Insurance Tbk is currently generating about -0.13 per unit of risk. If you would invest 103,000 in Garuda Metalindo Tbk on September 3, 2024 and sell it today you would earn a total of 19,000 from holding Garuda Metalindo Tbk or generate 18.45% 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. Victoria Insurance Tbk
Performance |
| Timeline |
| Garuda Metalindo Tbk |
| Victoria Insurance Tbk |
Garuda Metalindo and Victoria Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garuda Metalindo and Victoria Insurance
The main advantage of trading using opposite Garuda Metalindo and Victoria Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garuda Metalindo position performs unexpectedly, Victoria Insurance 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 Victoria Insurance will offset losses from the drop in Victoria Insurance's long position.| Garuda Metalindo vs. Intanwijaya Internasional Tbk | Garuda Metalindo vs. Champion Pacific Indonesia | Garuda Metalindo vs. Mitra Pinasthika Mustika | Garuda Metalindo vs. Jakarta Int Hotels |
| Victoria Insurance vs. Paninvest Tbk | Victoria Insurance vs. Mitra Pinasthika Mustika | Victoria Insurance vs. Jakarta Int Hotels | Victoria Insurance vs. Asuransi Harta Aman |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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