Correlation Between Alphabet and Garuda Metalindo
Can any of the company-specific risk be diversified away by investing in both Alphabet 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 Alphabet and Garuda Metalindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Inc Class C and Garuda Metalindo Tbk, you can compare the effects of market volatilities on Alphabet 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 Alphabet with a short position of Garuda Metalindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Garuda Metalindo.
Diversification Opportunities for Alphabet and Garuda Metalindo
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alphabet and Garuda is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C 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 Alphabet 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 Alphabet Inc Class C 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 Alphabet i.e., Alphabet and Garuda Metalindo go up and down completely randomly.
Pair Corralation between Alphabet and Garuda Metalindo
Given the investment horizon of 90 days Alphabet is expected to generate 1.28 times less return on investment than Garuda Metalindo. But when comparing it to its historical volatility, Alphabet Inc Class C is 1.43 times less risky than Garuda Metalindo. It trades about 0.04 of its potential returns per unit of risk. Garuda Metalindo Tbk is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 118,500 in Garuda Metalindo Tbk on August 25, 2024 and sell it today you would earn a total of 1,500 from holding Garuda Metalindo Tbk or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alphabet Inc Class C vs. Garuda Metalindo Tbk
Performance |
| Timeline |
| Alphabet Class C |
| Garuda Metalindo Tbk |
Alphabet and Garuda Metalindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Garuda Metalindo
The main advantage of trading using opposite Alphabet and Garuda Metalindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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.The idea behind Alphabet Inc Class C and Garuda Metalindo Tbk pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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