Correlation Between Garuda Indonesia and Nusa Konstruksi
Can any of the company-specific risk be diversified away by investing in both Garuda Indonesia and Nusa Konstruksi 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 Garuda Indonesia and Nusa Konstruksi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Garuda Indonesia Persero and Nusa Konstruksi Enjiniring, you can compare the effects of market volatilities on Garuda Indonesia and Nusa Konstruksi 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 Garuda Indonesia with a short position of Nusa Konstruksi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garuda Indonesia and Nusa Konstruksi.
Diversification Opportunities for Garuda Indonesia and Nusa Konstruksi
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Garuda and Nusa is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Indonesia Persero and Nusa Konstruksi Enjiniring in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nusa Konstruksi Enji and Garuda Indonesia 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 Garuda Indonesia Persero are associated (or correlated) with Nusa Konstruksi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nusa Konstruksi Enji has no effect on the direction of Garuda Indonesia i.e., Garuda Indonesia and Nusa Konstruksi go up and down completely randomly.
Pair Corralation between Garuda Indonesia and Nusa Konstruksi
Assuming the 90 days trading horizon Garuda Indonesia Persero is expected to generate 3.79 times more return on investment than Nusa Konstruksi. However, Garuda Indonesia is 3.79 times more volatile than Nusa Konstruksi Enjiniring. It trades about -0.06 of its potential returns per unit of risk. Nusa Konstruksi Enjiniring is currently generating about -0.27 per unit of risk. If you would invest 6,200 in Garuda Indonesia Persero on August 31, 2024 and sell it today you would lose (300.00) from holding Garuda Indonesia Persero or give up 4.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Garuda Indonesia Persero vs. Nusa Konstruksi Enjiniring
Performance |
| Timeline |
| Garuda Indonesia Persero |
| Nusa Konstruksi Enji |
Garuda Indonesia and Nusa Konstruksi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garuda Indonesia and Nusa Konstruksi
The main advantage of trading using opposite Garuda Indonesia and Nusa Konstruksi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garuda Indonesia position performs unexpectedly, Nusa Konstruksi 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 Nusa Konstruksi will offset losses from the drop in Nusa Konstruksi's long position.| Garuda Indonesia vs. Matahari Department Store | Garuda Indonesia vs. Multi Medika Internasional | Garuda Indonesia vs. Visi Media Asia | Garuda Indonesia vs. Bayan Resources Tbk |
| Nusa Konstruksi vs. Sentul City Tbk | Nusa Konstruksi vs. Gozco Plantations Tbk | Nusa Konstruksi vs. Bukit Darmo Property | Nusa Konstruksi vs. Total Bangun Persada |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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