Correlation Between Eratex Djaja and Garuda Metalindo
Can any of the company-specific risk be diversified away by investing in both Eratex Djaja 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 Eratex Djaja and Garuda Metalindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eratex Djaja Tbk and Garuda Metalindo Tbk, you can compare the effects of market volatilities on Eratex Djaja 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 Eratex Djaja with a short position of Garuda Metalindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eratex Djaja and Garuda Metalindo.
Diversification Opportunities for Eratex Djaja and Garuda Metalindo
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Eratex and Garuda is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Eratex Djaja 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 Eratex Djaja 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 Eratex Djaja 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 Eratex Djaja i.e., Eratex Djaja and Garuda Metalindo go up and down completely randomly.
Pair Corralation between Eratex Djaja and Garuda Metalindo
Assuming the 90 days trading horizon Eratex Djaja Tbk is expected to generate 2.95 times more return on investment than Garuda Metalindo. However, Eratex Djaja is 2.95 times more volatile than Garuda Metalindo Tbk. It trades about 0.08 of its potential returns per unit of risk. Garuda Metalindo Tbk is currently generating about 0.03 per unit of risk. If you would invest 9,300 in Eratex Djaja Tbk on August 25, 2024 and sell it today you would earn a total of 800.00 from holding Eratex Djaja Tbk or generate 8.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eratex Djaja Tbk vs. Garuda Metalindo Tbk
Performance |
| Timeline |
| Eratex Djaja Tbk |
| Garuda Metalindo Tbk |
Eratex Djaja and Garuda Metalindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eratex Djaja and Garuda Metalindo
The main advantage of trading using opposite Eratex Djaja and Garuda Metalindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eratex Djaja 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.| Eratex Djaja vs. Ever Shine Textile | Eratex Djaja vs. PT Century Textile | Eratex Djaja vs. Argo Pantes Tbk | Eratex Djaja vs. Primarindo Asia Infrastructure |
| Garuda Metalindo vs. Samudera Indonesia Tbk | Garuda Metalindo vs. Rukun Raharja Tbk | Garuda Metalindo vs. PT Temas Tbk | Garuda Metalindo vs. Weha Transportasi Indonesia |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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