Correlation Between Garuda Metalindo and PT Estee

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

Diversification Opportunities for Garuda Metalindo and PT Estee

-0.84

Correlation Coefficient

Garuda Metalindo  PT Estee

Pay attention - limited upside

The 3 months correlation between Garuda and EURO is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Metalindo Tbk and PT Estee Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Estee Gold 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 Estee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Estee Gold has no effect on the direction of Garuda Metalindo i.e., Garuda Metalindo and PT Estee go up and down completely randomly.

Pair Corralation between Garuda Metalindo and PT Estee

Assuming the 90 days trading horizon Garuda Metalindo Tbk is expected to generate 0.32 times more return on investment than PT Estee. However, Garuda Metalindo Tbk is 3.15 times less risky than PT Estee. It trades about 0.26 of its potential returns per unit of risk. PT Estee Gold is currently generating about -0.24 per unit of risk. If you would invest  112,000  in Garuda Metalindo Tbk on October 9, 2024 and sell it today you would earn a total of  19,500  from holding Garuda Metalindo Tbk or generate 17.41% return on investment over 90 days.

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

Garuda Metalindo Tbk  vs.  PT Estee Gold

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 Estee Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Estee Gold 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 Estee

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

The idea behind Garuda Metalindo Tbk and PT Estee Gold 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.

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.