Correlation Between Indorama Synthetics and Garuda Metalindo
Can any of the company-specific risk be diversified away by investing in both Indorama Synthetics 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 Indorama Synthetics and Garuda Metalindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indorama Synthetics Tbk and Garuda Metalindo Tbk, you can compare the effects of market volatilities on Indorama Synthetics 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 Indorama Synthetics with a short position of Garuda Metalindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indorama Synthetics and Garuda Metalindo.
Diversification Opportunities for Indorama Synthetics and Garuda Metalindo
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Indorama and Garuda is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Indorama Synthetics Tbk 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 Indorama Synthetics 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 Indorama Synthetics Tbk 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 Indorama Synthetics i.e., Indorama Synthetics and Garuda Metalindo go up and down completely randomly.
Pair Corralation between Indorama Synthetics and Garuda Metalindo
Assuming the 90 days trading horizon Indorama Synthetics Tbk is expected to under-perform the Garuda Metalindo. In addition to that, Indorama Synthetics is 1.49 times more volatile than Garuda Metalindo Tbk. It trades about -0.04 of its total potential returns per unit of risk. Garuda Metalindo Tbk is currently generating about 0.02 per unit of volatility. If you would invest 128,000 in Garuda Metalindo Tbk on October 23, 2024 and sell it today you would earn a total of 500.00 from holding Garuda Metalindo Tbk or generate 0.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Indorama Synthetics Tbk vs. Garuda Metalindo Tbk
Performance |
| Timeline |
| Indorama Synthetics Tbk |
| Garuda Metalindo Tbk |
Indorama Synthetics and Garuda Metalindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indorama Synthetics and Garuda Metalindo
The main advantage of trading using opposite Indorama Synthetics and Garuda Metalindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indorama Synthetics 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.| Indorama Synthetics vs. Indospring Tbk | Indorama Synthetics vs. Indomobil Sukses Internasional | Indorama Synthetics vs. Sumi Indo Kabel | Indorama Synthetics vs. Goodyear Indonesia Tbk |
| Garuda Metalindo vs. Indospring Tbk | Garuda Metalindo vs. Kabelindo Murni Tbk | Garuda Metalindo vs. Bintang Oto Global |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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