Correlation Between Indofood Cbp and Garuda Metalindo
Can any of the company-specific risk be diversified away by investing in both Indofood Cbp 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 Indofood Cbp and Garuda Metalindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indofood Cbp Sukses and Garuda Metalindo Tbk, you can compare the effects of market volatilities on Indofood Cbp 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 Indofood Cbp with a short position of Garuda Metalindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Cbp and Garuda Metalindo.
Diversification Opportunities for Indofood Cbp and Garuda Metalindo
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Indofood and Garuda is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Cbp Sukses 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 Indofood Cbp 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 Indofood Cbp Sukses 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 Indofood Cbp i.e., Indofood Cbp and Garuda Metalindo go up and down completely randomly.
Pair Corralation between Indofood Cbp and Garuda Metalindo
Assuming the 90 days trading horizon Indofood Cbp Sukses is expected to under-perform the Garuda Metalindo. But the stock apears to be less risky and, when comparing its historical volatility, Indofood Cbp Sukses is 1.36 times less risky than Garuda Metalindo. The stock trades about -0.13 of its potential returns per unit of risk. The Garuda Metalindo Tbk is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 110,000 in Garuda Metalindo Tbk on September 4, 2024 and sell it today you would earn a total of 14,500 from holding Garuda Metalindo Tbk or generate 13.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indofood Cbp Sukses vs. Garuda Metalindo Tbk
Performance |
| Timeline |
| Indofood Cbp Sukses |
| Garuda Metalindo Tbk |
Indofood Cbp and Garuda Metalindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Cbp and Garuda Metalindo
The main advantage of trading using opposite Indofood Cbp and Garuda Metalindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Cbp 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.| Indofood Cbp vs. Unilever Indonesia Tbk | Indofood Cbp vs. PT Indofood Sukses | Indofood Cbp vs. Astra International Tbk | Indofood Cbp vs. Telkom Indonesia Tbk |
| Garuda Metalindo vs. Intanwijaya Internasional Tbk | Garuda Metalindo vs. Champion Pacific Indonesia | Garuda Metalindo vs. Mitra Pinasthika Mustika | Garuda Metalindo vs. Jakarta Int Hotels |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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