Correlation Between Cartrade Tech and Garuda Construction

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

By analyzing existing cross correlation between Cartrade Tech Limited and Garuda Construction Engineering, you can compare the effects of market volatilities on Cartrade Tech and Garuda Construction 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 Cartrade Tech with a short position of Garuda Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cartrade Tech and Garuda Construction.

Diversification Opportunities for Cartrade Tech and Garuda Construction

-0.12

Correlation Coefficient

Cartrade Tech  Garuda Construction

Good diversification

The 3 months correlation between Cartrade and Garuda is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Cartrade Tech Limited and Garuda Construction Engineerin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garuda Construction and Cartrade Tech 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 Cartrade Tech Limited are associated (or correlated) with Garuda Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garuda Construction has no effect on the direction of Cartrade Tech i.e., Cartrade Tech and Garuda Construction go up and down completely randomly.

Pair Corralation between Cartrade Tech and Garuda Construction

Assuming the 90 days trading horizon Cartrade Tech is expected to generate 1.62 times less return on investment than Garuda Construction. But when comparing it to its historical volatility, Cartrade Tech Limited is 1.56 times less risky than Garuda Construction. It trades about 0.1 of its potential returns per unit of risk. Garuda Construction Engineering is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  10,636  in Garuda Construction Engineering on October 5, 2024 and sell it today you would earn a total of  2,500  from holding Garuda Construction Engineering or generate 23.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	11.36%
Values	Daily Returns

Cartrade Tech Limited  vs.  Garuda Construction Engineerin

Cartrade Tech Limited

Risk-Adjusted Performance

28 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cartrade Tech Limited are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Cartrade Tech exhibited solid returns over the last few months and may actually be approaching a breakup point.

Garuda Construction

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Garuda Construction Engineering are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Garuda Construction sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cartrade Tech and Garuda Construction

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

The idea behind Cartrade Tech Limited and Garuda Construction Engineering 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 Commodity Directory module to find actively traded commodities issued by global exchanges.