Correlation Between Garuda Construction and 21st Century

Can any of the company-specific risk be diversified away by investing in both Garuda Construction and 21st Century 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 Construction and 21st Century into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Garuda Construction Engineering and 21st Century Management, you can compare the effects of market volatilities on Garuda Construction and 21st Century 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 Construction with a short position of 21st Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garuda Construction and 21st Century.

Diversification Opportunities for Garuda Construction and 21st Century

-0.2

Correlation Coefficient

Garuda Construction  21st Century

Good diversification

The 3 months correlation between Garuda and 21st is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Construction Engineerin and 21st Century Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 21st Century Management and Garuda 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 Garuda Construction Engineering are associated (or correlated) with 21st Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 21st Century Management has no effect on the direction of Garuda Construction i.e., Garuda Construction and 21st Century go up and down completely randomly.

Pair Corralation between Garuda Construction and 21st Century

Assuming the 90 days trading horizon Garuda Construction Engineering is expected to generate 2.61 times more return on investment than 21st Century. However, Garuda Construction is 2.61 times more volatile than 21st Century Management. It trades about 0.09 of its potential returns per unit of risk. 21st Century Management is currently generating about -0.14 per unit of risk. If you would invest  10,636  in Garuda Construction Engineering on October 1, 2024 and sell it today you would earn a total of  2,092  from holding Garuda Construction Engineering or generate 19.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.48%
Values	Daily Returns

Garuda Construction Engineerin  vs.  21st Century Management

Garuda Construction

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Garuda Construction Engineering are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Garuda Construction sustained solid returns over the last few months and may actually be approaching a breakup point.

21st Century Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 21st Century Management 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 primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Garuda Construction and 21st Century

The main advantage of trading using opposite Garuda Construction and 21st Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garuda Construction position performs unexpectedly, 21st Century 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 21st Century will offset losses from the drop in 21st Century's long position.

The idea behind Garuda Construction Engineering and 21st Century Management 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.