Correlation Between Indo Kordsa and Garuda Metalindo
Can any of the company-specific risk be diversified away by investing in both Indo Kordsa and Garuda Metalindo 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 Indo Kordsa and Garuda Metalindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indo Kordsa Tbk and Garuda Metalindo Tbk, you can compare the effects of market volatilities on Indo Kordsa and Garuda Metalindo 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 Indo Kordsa with a short position of Garuda Metalindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Kordsa and Garuda Metalindo.
Diversification Opportunities for Indo Kordsa and Garuda Metalindo
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Indo and Garuda is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Indo Kordsa Tbk and Garuda Metalindo Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garuda Metalindo Tbk and Indo Kordsa 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 Indo Kordsa Tbk are associated (or correlated) with Garuda Metalindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garuda Metalindo Tbk has no effect on the direction of Indo Kordsa i.e., Indo Kordsa and Garuda Metalindo go up and down completely randomly.
Pair Corralation between Indo Kordsa and Garuda Metalindo
Assuming the 90 days trading horizon Indo Kordsa Tbk is expected to under-perform the Garuda Metalindo. But the stock apears to be less risky and, when comparing its historical volatility, Indo Kordsa Tbk is 1.42 times less risky than Garuda Metalindo. The stock trades about -0.02 of its potential returns per unit of risk. The Garuda Metalindo Tbk is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 67,448 in Garuda Metalindo Tbk on August 25, 2024 and sell it today you would earn a total of 52,552 from holding Garuda Metalindo Tbk or generate 77.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Indo Kordsa Tbk vs. Garuda Metalindo Tbk
Performance |
| Timeline |
| Indo Kordsa Tbk |
| Garuda Metalindo Tbk |
Indo Kordsa and Garuda Metalindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indo Kordsa and Garuda Metalindo
The main advantage of trading using opposite Indo Kordsa and Garuda Metalindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indo Kordsa position performs unexpectedly, Garuda Metalindo 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 Garuda Metalindo will offset losses from the drop in Garuda Metalindo's long position.| Indo Kordsa vs. Goodyear Indonesia Tbk | Indo Kordsa vs. Sepatu Bata Tbk | Indo Kordsa vs. Indospring Tbk | Indo Kordsa vs. Ever Shine Textile |
| Garuda Metalindo vs. Indo Kordsa Tbk | Garuda Metalindo vs. Indospring Tbk | Garuda Metalindo vs. Kabelindo Murni Tbk | Garuda Metalindo vs. Blue Bird Tbk |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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