Correlation Between Garuda Metalindo and Asuransi Jiwa

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

Diversification Opportunities for Garuda Metalindo and Asuransi Jiwa

-0.44

Correlation Coefficient

Garuda Metalindo  Asuransi Jiwa

Very good diversification

The 3 months correlation between Garuda and Asuransi is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Metalindo Tbk and Asuransi Jiwa Syariah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asuransi Jiwa Syariah 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 Asuransi Jiwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asuransi Jiwa Syariah has no effect on the direction of Garuda Metalindo i.e., Garuda Metalindo and Asuransi Jiwa go up and down completely randomly.

Pair Corralation between Garuda Metalindo and Asuransi Jiwa

Assuming the 90 days trading horizon Garuda Metalindo Tbk is expected to generate 0.47 times more return on investment than Asuransi Jiwa. However, Garuda Metalindo Tbk is 2.15 times less risky than Asuransi Jiwa. It trades about 0.02 of its potential returns per unit of risk. Asuransi Jiwa Syariah is currently generating about -0.02 per unit of risk. If you would invest  128,000  in Garuda Metalindo Tbk on December 23, 2024 and sell it today you would earn a total of  1,000.00  from holding Garuda Metalindo Tbk or generate 0.78% return on investment over 90 days.

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

Garuda Metalindo Tbk  vs.  Asuransi Jiwa Syariah

Garuda Metalindo Tbk

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Garuda Metalindo Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Asuransi Jiwa Syariah

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asuransi Jiwa Syariah has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Asuransi Jiwa 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 Asuransi Jiwa

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

The idea behind Garuda Metalindo Tbk and Asuransi Jiwa Syariah 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.