Correlation Between Kirana Megatara and Garuda Metalindo
Can any of the company-specific risk be diversified away by investing in both Kirana Megatara 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 Kirana Megatara and Garuda Metalindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kirana Megatara Tbk and Garuda Metalindo Tbk, you can compare the effects of market volatilities on Kirana Megatara 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 Kirana Megatara with a short position of Garuda Metalindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kirana Megatara and Garuda Metalindo.
Diversification Opportunities for Kirana Megatara and Garuda Metalindo
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kirana and Garuda is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kirana Megatara 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 Kirana Megatara 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 Kirana Megatara 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 Kirana Megatara i.e., Kirana Megatara and Garuda Metalindo go up and down completely randomly.
Pair Corralation between Kirana Megatara and Garuda Metalindo
Assuming the 90 days trading horizon Kirana Megatara Tbk is expected to generate 2.3 times more return on investment than Garuda Metalindo. However, Kirana Megatara is 2.3 times more volatile than Garuda Metalindo Tbk. It trades about 0.12 of its potential returns per unit of risk. Garuda Metalindo Tbk is currently generating about 0.13 per unit of risk. If you would invest 24,200 in Kirana Megatara Tbk on August 29, 2024 and sell it today you would earn a total of 6,800 from holding Kirana Megatara Tbk or generate 28.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kirana Megatara Tbk vs. Garuda Metalindo Tbk
Performance |
| Timeline |
| Kirana Megatara Tbk |
| Garuda Metalindo Tbk |
Kirana Megatara and Garuda Metalindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kirana Megatara and Garuda Metalindo
The main advantage of trading using opposite Kirana Megatara and Garuda Metalindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kirana Megatara 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.| Kirana Megatara vs. Emdeki Utama Tbk | Kirana Megatara vs. Panca Budi Idaman | Kirana Megatara vs. Mark Dynamics Indonesia | Kirana Megatara vs. Map Boga Adiperkasa |
| Garuda Metalindo vs. Indo Kordsa Tbk | Garuda Metalindo vs. Indospring Tbk | Garuda Metalindo vs. Kabelindo Murni Tbk | Garuda Metalindo vs. Blue Bird 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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