Correlation Between Garuda Indonesia and Optima Prima
Can any of the company-specific risk be diversified away by investing in both Garuda Indonesia and Optima Prima 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 Optima Prima 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 Optima Prima Metal, you can compare the effects of market volatilities on Garuda Indonesia and Optima Prima 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 Optima Prima. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garuda Indonesia and Optima Prima.
Diversification Opportunities for Garuda Indonesia and Optima Prima
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Garuda and Optima is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Indonesia Persero and Optima Prima Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optima Prima Metal 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 Optima Prima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optima Prima Metal has no effect on the direction of Garuda Indonesia i.e., Garuda Indonesia and Optima Prima go up and down completely randomly.
Pair Corralation between Garuda Indonesia and Optima Prima
Assuming the 90 days trading horizon Garuda Indonesia is expected to generate 2.32 times less return on investment than Optima Prima. But when comparing it to its historical volatility, Garuda Indonesia Persero is 1.27 times less risky than Optima Prima. It trades about 0.01 of its potential returns per unit of risk. Optima Prima Metal is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 5,600 in Optima Prima Metal on August 31, 2024 and sell it today you would lose (500.00) from holding Optima Prima Metal or give up 8.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.72% |
| Values | Daily Returns |
Garuda Indonesia Persero vs. Optima Prima Metal
Performance |
| Timeline |
| Garuda Indonesia Persero |
| Optima Prima Metal |
Garuda Indonesia and Optima Prima Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garuda Indonesia and Optima Prima
The main advantage of trading using opposite Garuda Indonesia and Optima Prima positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garuda Indonesia position performs unexpectedly, Optima Prima 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 Optima Prima will offset losses from the drop in Optima Prima'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 |
| Optima Prima vs. Emdeki Utama Tbk | Optima Prima vs. Nusantara Almazia | Optima Prima vs. Sentral Mitra Informatika | Optima Prima vs. Darmi Bersaudara 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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