Correlation Between Bayan Resources and Garuda Metalindo
Can any of the company-specific risk be diversified away by investing in both Bayan Resources 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 Bayan Resources and Garuda Metalindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bayan Resources Tbk and Garuda Metalindo Tbk, you can compare the effects of market volatilities on Bayan Resources 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 Bayan Resources with a short position of Garuda Metalindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayan Resources and Garuda Metalindo.
Diversification Opportunities for Bayan Resources and Garuda Metalindo
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bayan and Garuda is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bayan Resources 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 Bayan Resources 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 Bayan Resources 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 Bayan Resources i.e., Bayan Resources and Garuda Metalindo go up and down completely randomly.
Pair Corralation between Bayan Resources and Garuda Metalindo
Assuming the 90 days trading horizon Bayan Resources Tbk is expected to generate 0.56 times more return on investment than Garuda Metalindo. However, Bayan Resources Tbk is 1.77 times less risky than Garuda Metalindo. It trades about 0.42 of its potential returns per unit of risk. Garuda Metalindo Tbk is currently generating about 0.16 per unit of risk. If you would invest 1,720,000 in Bayan Resources Tbk on September 1, 2024 and sell it today you would earn a total of 237,500 from holding Bayan Resources Tbk or generate 13.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bayan Resources Tbk vs. Garuda Metalindo Tbk
Performance |
| Timeline |
| Bayan Resources Tbk |
| Garuda Metalindo Tbk |
Bayan Resources and Garuda Metalindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayan Resources and Garuda Metalindo
The main advantage of trading using opposite Bayan Resources and Garuda Metalindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayan Resources 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.| Bayan Resources vs. Indo Tambangraya Megah | Bayan Resources vs. Indika Energy Tbk | Bayan Resources vs. Darma Henwa Tbk | Bayan Resources vs. Harum Energy Tbk |
| Garuda Metalindo vs. Matahari Department Store | Garuda Metalindo vs. Multi Medika Internasional | Garuda Metalindo vs. Visi Media Asia | Garuda Metalindo vs. Bayan Resources 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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