Correlation Between Consolidated Construction and Garuda Construction

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

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

Diversification Opportunities for Consolidated Construction and Garuda Construction

0.58

Correlation Coefficient

Consolidated Construction  Garuda Construction

Very weak diversification

The 3 months correlation between Consolidated and Garuda is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Construction Cons and Garuda Construction Engineerin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garuda Construction and Consolidated Construction 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 Consolidated Construction Consortium 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 Consolidated Construction i.e., Consolidated Construction and Garuda Construction go up and down completely randomly.

Pair Corralation between Consolidated Construction and Garuda Construction

Assuming the 90 days trading horizon Consolidated Construction Consortium is expected to generate 6.67 times more return on investment than Garuda Construction. However, Consolidated Construction is 6.67 times more volatile than Garuda Construction Engineering. It trades about 0.05 of its potential returns per unit of risk. Garuda Construction Engineering is currently generating about 0.1 per unit of risk. If you would invest  155.00  in Consolidated Construction Consortium on October 5, 2024 and sell it today you would earn a total of  1,403  from holding Consolidated Construction Consortium or generate 905.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	11.8%
Values	Daily Returns

Consolidated Construction Cons  vs.  Garuda Construction Engineerin

Consolidated Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Consolidated Construction Consortium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 Consolidated Construction and Garuda Construction

The main advantage of trading using opposite Consolidated Construction and Garuda Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Construction 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 Consolidated Construction Consortium 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.