Correlation Between Diamond Food and Galva Technologies
Can any of the company-specific risk be diversified away by investing in both Diamond Food and Galva Technologies 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 Diamond Food and Galva Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Food Indonesia and Galva Technologies Tbk, you can compare the effects of market volatilities on Diamond Food and Galva Technologies 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 Diamond Food with a short position of Galva Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Food and Galva Technologies.
Diversification Opportunities for Diamond Food and Galva Technologies
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Diamond and Galva is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Food Indonesia and Galva Technologies Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galva Technologies Tbk and Diamond Food 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 Diamond Food Indonesia are associated (or correlated) with Galva Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galva Technologies Tbk has no effect on the direction of Diamond Food i.e., Diamond Food and Galva Technologies go up and down completely randomly.
Pair Corralation between Diamond Food and Galva Technologies
Assuming the 90 days trading horizon Diamond Food Indonesia is expected to under-perform the Galva Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Diamond Food Indonesia is 3.76 times less risky than Galva Technologies. The stock trades about 0.0 of its potential returns per unit of risk. The Galva Technologies Tbk is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 51,534 in Galva Technologies Tbk on August 30, 2024 and sell it today you would lose (16,334) from holding Galva Technologies Tbk or give up 31.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Food Indonesia vs. Galva Technologies Tbk
Performance |
| Timeline |
| Diamond Food Indonesia |
| Galva Technologies Tbk |
Diamond Food and Galva Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Food and Galva Technologies
The main advantage of trading using opposite Diamond Food and Galva Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Food position performs unexpectedly, Galva Technologies 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 Galva Technologies will offset losses from the drop in Galva Technologies' long position.| Diamond Food vs. Garudafood Putra Putri | Diamond Food vs. Campina Ice Cream | Diamond Food vs. Uni Charm Indonesia | Diamond Food vs. Sariguna Primatirta PT |
| Galva Technologies vs. Multipolar Technology Tbk | Galva Technologies vs. Nusantara Voucher Distribution | Galva Technologies vs. Hensel Davest Indonesia | Galva Technologies vs. Anabatic Technologies 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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