Correlation Between Garuda Metalindo and PT Wahana

Can any of the company-specific risk be diversified away by investing in both Garuda Metalindo and PT Wahana 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 PT Wahana 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 PT Wahana Interfood, you can compare the effects of market volatilities on Garuda Metalindo and PT Wahana 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 PT Wahana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garuda Metalindo and PT Wahana.

Diversification Opportunities for Garuda Metalindo and PT Wahana

-0.79

Correlation Coefficient

Garuda Metalindo  PT Wahana

Pay attention - limited upside

The 3 months correlation between Garuda and COCO is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Metalindo Tbk and PT Wahana Interfood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Wahana Interfood 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 PT Wahana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Wahana Interfood has no effect on the direction of Garuda Metalindo i.e., Garuda Metalindo and PT Wahana go up and down completely randomly.

Pair Corralation between Garuda Metalindo and PT Wahana

Assuming the 90 days trading horizon Garuda Metalindo Tbk is expected to generate 0.46 times more return on investment than PT Wahana. However, Garuda Metalindo Tbk is 2.16 times less risky than PT Wahana. It trades about 0.26 of its potential returns per unit of risk. PT Wahana Interfood is currently generating about -0.23 per unit of risk. If you would invest  129,500  in Garuda Metalindo Tbk on October 12, 2024 and sell it today you would earn a total of  4,000  from holding Garuda Metalindo Tbk or generate 3.09% return on investment over 90 days.

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

Garuda Metalindo Tbk  vs.  PT Wahana Interfood

Garuda Metalindo Tbk

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Garuda Metalindo Tbk are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Garuda Metalindo disclosed solid returns over the last few months and may actually be approaching a breakup point.

PT Wahana Interfood

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Wahana Interfood has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Garuda Metalindo and PT Wahana

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

The idea behind Garuda Metalindo Tbk and PT Wahana Interfood 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.