Correlation Between Garudafood Putra and Indonesian Tobacco
Can any of the company-specific risk be diversified away by investing in both Garudafood Putra and Indonesian Tobacco 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 Garudafood Putra and Indonesian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Garudafood Putra Putri and Indonesian Tobacco Tbk, you can compare the effects of market volatilities on Garudafood Putra and Indonesian Tobacco 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 Garudafood Putra with a short position of Indonesian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garudafood Putra and Indonesian Tobacco.
Diversification Opportunities for Garudafood Putra and Indonesian Tobacco
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Garudafood and Indonesian is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Garudafood Putra Putri and Indonesian Tobacco Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indonesian Tobacco Tbk and Garudafood Putra 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 Garudafood Putra Putri are associated (or correlated) with Indonesian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indonesian Tobacco Tbk has no effect on the direction of Garudafood Putra i.e., Garudafood Putra and Indonesian Tobacco go up and down completely randomly.
Pair Corralation between Garudafood Putra and Indonesian Tobacco
Assuming the 90 days trading horizon Garudafood Putra Putri is expected to under-perform the Indonesian Tobacco. In addition to that, Garudafood Putra is 1.68 times more volatile than Indonesian Tobacco Tbk. It trades about -0.08 of its total potential returns per unit of risk. Indonesian Tobacco Tbk is currently generating about -0.03 per unit of volatility. If you would invest 27,000 in Indonesian Tobacco Tbk on August 30, 2024 and sell it today you would lose (400.00) from holding Indonesian Tobacco Tbk or give up 1.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Garudafood Putra Putri vs. Indonesian Tobacco Tbk
Performance |
| Timeline |
| Garudafood Putra Putri |
| Indonesian Tobacco Tbk |
Garudafood Putra and Indonesian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garudafood Putra and Indonesian Tobacco
The main advantage of trading using opposite Garudafood Putra and Indonesian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garudafood Putra position performs unexpectedly, Indonesian Tobacco 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 Indonesian Tobacco will offset losses from the drop in Indonesian Tobacco's long position.| Garudafood Putra vs. Sariguna Primatirta PT | Garudafood Putra vs. Ultra Jaya Milk | Garudafood Putra vs. Nippon Indosari Corpindo | Garudafood Putra vs. Kino Indonesia Tbk |
| Indonesian Tobacco vs. Wismilak Inti Makmur | Indonesian Tobacco vs. J Resources Asia | Indonesian Tobacco vs. Transcoal Pacific Tbk | Indonesian Tobacco vs. Garudafood Putra Putri |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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