Correlation Between Garuda Metalindo and PT Data

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

Diversification Opportunities for Garuda Metalindo and PT Data

0.26

Correlation Coefficient

Garuda Metalindo  PT Data

Modest diversification

The 3 months correlation between Garuda and ELIT is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Metalindo Tbk and PT Data Sinergitama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Data Sinergitama 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 Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Data Sinergitama has no effect on the direction of Garuda Metalindo i.e., Garuda Metalindo and PT Data go up and down completely randomly.

Pair Corralation between Garuda Metalindo and PT Data

Assuming the 90 days trading horizon Garuda Metalindo Tbk is expected to under-perform the PT Data. But the stock apears to be less risky and, when comparing its historical volatility, Garuda Metalindo Tbk is 5.55 times less risky than PT Data. The stock trades about -0.05 of its potential returns per unit of risk. The PT Data Sinergitama is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  11,800  in PT Data Sinergitama on December 30, 2024 and sell it today you would earn a total of  5,900  from holding PT Data Sinergitama or generate 50.0% return on investment over 90 days.

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

Garuda Metalindo Tbk  vs.  PT Data Sinergitama

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.

PT Data Sinergitama

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PT Data Sinergitama are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Data disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Garuda Metalindo and PT Data

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

The idea behind Garuda Metalindo Tbk and PT Data Sinergitama 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 CEOs Directory module to screen CEOs from public companies around the world.