Correlation Between Trans Power and Garuda Metalindo
Can any of the company-specific risk be diversified away by investing in both Trans Power 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 Trans Power and Garuda Metalindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trans Power Marine and Garuda Metalindo Tbk, you can compare the effects of market volatilities on Trans Power 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 Trans Power with a short position of Garuda Metalindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trans Power and Garuda Metalindo.
Diversification Opportunities for Trans Power and Garuda Metalindo
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Trans and Garuda is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Trans Power Marine 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 Trans Power 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 Trans Power Marine 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 Trans Power i.e., Trans Power and Garuda Metalindo go up and down completely randomly.
Pair Corralation between Trans Power and Garuda Metalindo
Assuming the 90 days trading horizon Trans Power Marine is expected to under-perform the Garuda Metalindo. In addition to that, Trans Power is 1.39 times more volatile than Garuda Metalindo Tbk. It trades about -0.01 of its total potential returns per unit of risk. Garuda Metalindo Tbk is currently generating about 0.2 per unit of volatility. If you would invest 78,829 in Garuda Metalindo Tbk on September 1, 2024 and sell it today you would earn a total of 43,171 from holding Garuda Metalindo Tbk or generate 54.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trans Power Marine vs. Garuda Metalindo Tbk
Performance |
| Timeline |
| Trans Power Marine |
| Garuda Metalindo Tbk |
Trans Power and Garuda Metalindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trans Power and Garuda Metalindo
The main advantage of trading using opposite Trans Power and Garuda Metalindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trans Power 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.| Trans Power vs. Matahari Department Store | Trans Power vs. Multi Medika Internasional | Trans Power vs. Visi Media Asia | Trans Power vs. Bayan Resources Tbk |
| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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