Correlation Between Surya Toto and Garuda Metalindo
Can any of the company-specific risk be diversified away by investing in both Surya Toto 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 Surya Toto and Garuda Metalindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Surya Toto Indonesia and Garuda Metalindo Tbk, you can compare the effects of market volatilities on Surya Toto 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 Surya Toto with a short position of Garuda Metalindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Surya Toto and Garuda Metalindo.
Diversification Opportunities for Surya Toto and Garuda Metalindo
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Surya and Garuda is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Surya Toto Indonesia 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 Surya Toto 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 Surya Toto Indonesia 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 Surya Toto i.e., Surya Toto and Garuda Metalindo go up and down completely randomly.
Pair Corralation between Surya Toto and Garuda Metalindo
Assuming the 90 days trading horizon Surya Toto is expected to generate 6.17 times less return on investment than Garuda Metalindo. But when comparing it to its historical volatility, Surya Toto Indonesia is 1.4 times less risky than Garuda Metalindo. It trades about 0.04 of its potential returns per unit of risk. Garuda Metalindo Tbk is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 97,500 in Garuda Metalindo Tbk on November 3, 2024 and sell it today you would earn a total of 33,500 from holding Garuda Metalindo Tbk or generate 34.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Surya Toto Indonesia vs. Garuda Metalindo Tbk
Performance |
| Timeline |
| Surya Toto Indonesia |
| Garuda Metalindo Tbk |
Surya Toto and Garuda Metalindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Surya Toto and Garuda Metalindo
The main advantage of trading using opposite Surya Toto and Garuda Metalindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Surya Toto 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.| Surya Toto vs. Samudera Indonesia Tbk | Surya Toto vs. Weha Transportasi Indonesia | Surya Toto vs. Rig Tenders Tbk | Surya Toto vs. Total Bangun Persada |
| 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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