Correlation Between Garuda Metalindo and FKS Food

Can any of the company-specific risk be diversified away by investing in both Garuda Metalindo and FKS Food 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 Garuda Metalindo and FKS Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Garuda Metalindo Tbk and FKS Food Sejahtera, you can compare the effects of market volatilities on Garuda Metalindo and FKS Food 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 Garuda Metalindo with a short position of FKS Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garuda Metalindo and FKS Food.

Diversification Opportunities for Garuda Metalindo and FKS Food

-0.36

Correlation Coefficient

Garuda Metalindo  FKS Food

Very good diversification

The 3 months correlation between Garuda and FKS is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Metalindo Tbk and FKS Food Sejahtera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FKS Food Sejahtera and Garuda Metalindo 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 Garuda Metalindo Tbk are associated (or correlated) with FKS Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FKS Food Sejahtera has no effect on the direction of Garuda Metalindo i.e., Garuda Metalindo and FKS Food go up and down completely randomly.

Pair Corralation between Garuda Metalindo and FKS Food

Assuming the 90 days trading horizon Garuda Metalindo Tbk is expected to under-perform the FKS Food. But the stock apears to be less risky and, when comparing its historical volatility, Garuda Metalindo Tbk is 1.16 times less risky than FKS Food. The stock trades about -0.05 of its potential returns per unit of risk. The FKS Food Sejahtera is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  10,500  in FKS Food Sejahtera on December 29, 2024 and sell it today you would earn a total of  200.00  from holding FKS Food Sejahtera or generate 1.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Garuda Metalindo Tbk  vs.  FKS Food Sejahtera

Garuda Metalindo Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Garuda Metalindo Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Garuda Metalindo is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

FKS Food Sejahtera

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FKS Food Sejahtera are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, FKS Food is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Garuda Metalindo and FKS Food

The main advantage of trading using opposite Garuda Metalindo and FKS Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garuda Metalindo position performs unexpectedly, FKS Food 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 FKS Food will offset losses from the drop in FKS Food's long position.

The idea behind Garuda Metalindo Tbk and FKS Food Sejahtera pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.