Correlation Between Indonesian Tobacco and Garudafood Putra
Can any of the company-specific risk be diversified away by investing in both Indonesian Tobacco and Garudafood Putra 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 Indonesian Tobacco and Garudafood Putra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indonesian Tobacco Tbk and Garudafood Putra Putri, you can compare the effects of market volatilities on Indonesian Tobacco and Garudafood Putra 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 Indonesian Tobacco with a short position of Garudafood Putra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indonesian Tobacco and Garudafood Putra.
Diversification Opportunities for Indonesian Tobacco and Garudafood Putra
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Indonesian and Garudafood is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Indonesian Tobacco Tbk and Garudafood Putra Putri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garudafood Putra Putri and Indonesian Tobacco 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 Indonesian Tobacco Tbk are associated (or correlated) with Garudafood Putra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garudafood Putra Putri has no effect on the direction of Indonesian Tobacco i.e., Indonesian Tobacco and Garudafood Putra go up and down completely randomly.
Pair Corralation between Indonesian Tobacco and Garudafood Putra
Assuming the 90 days trading horizon Indonesian Tobacco Tbk is expected to generate 0.6 times more return on investment than Garudafood Putra. However, Indonesian Tobacco Tbk is 1.68 times less risky than Garudafood Putra. It trades about -0.03 of its potential returns per unit of risk. Garudafood Putra Putri is currently generating about -0.08 per unit of risk. 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 |
Indonesian Tobacco Tbk vs. Garudafood Putra Putri
Performance |
| Timeline |
| Indonesian Tobacco Tbk |
| Garudafood Putra Putri |
Indonesian Tobacco and Garudafood Putra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indonesian Tobacco and Garudafood Putra
The main advantage of trading using opposite Indonesian Tobacco and Garudafood Putra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indonesian Tobacco position performs unexpectedly, Garudafood Putra 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 Garudafood Putra will offset losses from the drop in Garudafood Putra's long position.| Indonesian Tobacco vs. Wismilak Inti Makmur | Indonesian Tobacco vs. J Resources Asia | Indonesian Tobacco vs. Transcoal Pacific Tbk | Indonesian Tobacco vs. Garudafood Putra Putri |
| Garudafood Putra vs. Sariguna Primatirta PT | Garudafood Putra vs. Ultra Jaya Milk | Garudafood Putra vs. Nippon Indosari Corpindo | Garudafood Putra vs. Kino Indonesia 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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