Correlation Between Garuda Construction and Oil Natural

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

Diversification Opportunities for Garuda Construction and Oil Natural

0.78

Correlation Coefficient

Garuda Construction  Oil Natural

Poor diversification

The 3 months correlation between Garuda and Oil is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Construction Engineerin and Oil Natural Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Natural Gas 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 Oil Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Natural Gas has no effect on the direction of Garuda Construction i.e., Garuda Construction and Oil Natural go up and down completely randomly.

Pair Corralation between Garuda Construction and Oil Natural

Assuming the 90 days trading horizon Garuda Construction Engineering is expected to generate 2.17 times more return on investment than Oil Natural. However, Garuda Construction is 2.17 times more volatile than Oil Natural Gas. It trades about 0.02 of its potential returns per unit of risk. Oil Natural Gas is currently generating about 0.03 per unit of risk. If you would invest  11,309  in Garuda Construction Engineering on December 23, 2024 and sell it today you would lose (21.00) from holding Garuda Construction Engineering or give up 0.19% of portfolio value over 90 days.

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

Garuda Construction Engineerin  vs.  Oil Natural Gas

Garuda Construction

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Garuda Construction Engineering are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Garuda Construction is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Oil Natural Gas

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oil Natural Gas are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Oil Natural is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Garuda Construction and Oil Natural

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

The idea behind Garuda Construction Engineering and Oil Natural Gas 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.