Correlation Between Metro Healthcare and Garuda Metalindo
Can any of the company-specific risk be diversified away by investing in both Metro Healthcare 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 Metro Healthcare and Garuda Metalindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Healthcare Indonesia and Garuda Metalindo Tbk, you can compare the effects of market volatilities on Metro Healthcare 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 Metro Healthcare with a short position of Garuda Metalindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Healthcare and Garuda Metalindo.
Diversification Opportunities for Metro Healthcare and Garuda Metalindo
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Metro and Garuda is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Metro Healthcare Indonesia 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 Metro Healthcare 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 Metro Healthcare Indonesia 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 Metro Healthcare i.e., Metro Healthcare and Garuda Metalindo go up and down completely randomly.
Pair Corralation between Metro Healthcare and Garuda Metalindo
Assuming the 90 days trading horizon Metro Healthcare Indonesia is expected to generate 1.45 times more return on investment than Garuda Metalindo. However, Metro Healthcare is 1.45 times more volatile than Garuda Metalindo Tbk. It trades about 0.42 of its potential returns per unit of risk. Garuda Metalindo Tbk is currently generating about 0.32 per unit of risk. If you would invest 13,000 in Metro Healthcare Indonesia on September 2, 2024 and sell it today you would earn a total of 4,100 from holding Metro Healthcare Indonesia or generate 31.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro Healthcare Indonesia vs. Garuda Metalindo Tbk
Performance |
| Timeline |
| Metro Healthcare Ind |
| Garuda Metalindo Tbk |
Metro Healthcare and Garuda Metalindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Healthcare and Garuda Metalindo
The main advantage of trading using opposite Metro Healthcare and Garuda Metalindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Healthcare 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.| Metro Healthcare vs. Medikaloka Hermina PT | Metro Healthcare vs. Sarana Meditama Metropolitan | Metro Healthcare vs. Mitra Keluarga Karyasehat | Metro Healthcare vs. Bhakti Multi Artha |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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