Correlation Between Matahari Department and Garuda Metalindo
Can any of the company-specific risk be diversified away by investing in both Matahari Department 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 Matahari Department and Garuda Metalindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matahari Department Store and Garuda Metalindo Tbk, you can compare the effects of market volatilities on Matahari Department 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 Matahari Department with a short position of Garuda Metalindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matahari Department and Garuda Metalindo.
Diversification Opportunities for Matahari Department and Garuda Metalindo
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Matahari and Garuda is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Matahari Department Store 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 Matahari Department 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 Matahari Department Store 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 Matahari Department i.e., Matahari Department and Garuda Metalindo go up and down completely randomly.
Pair Corralation between Matahari Department and Garuda Metalindo
Assuming the 90 days trading horizon Matahari Department Store is expected to under-perform the Garuda Metalindo. But the stock apears to be less risky and, when comparing its historical volatility, Matahari Department Store is 1.93 times less risky than Garuda Metalindo. The stock trades about -0.27 of its potential returns per unit of risk. The Garuda Metalindo Tbk is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 112,500 in Garuda Metalindo Tbk on September 1, 2024 and sell it today you would earn a total of 9,500 from holding Garuda Metalindo Tbk or generate 8.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matahari Department Store vs. Garuda Metalindo Tbk
Performance |
| Timeline |
| Matahari Department Store |
| Garuda Metalindo Tbk |
Matahari Department and Garuda Metalindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matahari Department and Garuda Metalindo
The main advantage of trading using opposite Matahari Department and Garuda Metalindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matahari Department 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.| Matahari Department vs. Surya Citra Media | Matahari Department vs. Akr Corporindo Tbk | Matahari Department vs. Media Nusantara Citra | Matahari Department vs. Pembangunan Perumahan PT |
| Garuda Metalindo vs. Matahari Department Store | Garuda Metalindo vs. Multi Medika Internasional | Garuda Metalindo vs. Visi Media Asia | Garuda Metalindo vs. Bayan Resources 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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