Correlation Between Garuda Construction and Baazar Style

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

Diversification Opportunities for Garuda Construction and Baazar Style

0.49

Correlation Coefficient

Garuda Construction  Baazar Style

Very weak diversification

The 3 months correlation between Garuda and Baazar is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Construction Engineerin and Baazar Style Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baazar Style Retail 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 Baazar Style. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baazar Style Retail has no effect on the direction of Garuda Construction i.e., Garuda Construction and Baazar Style go up and down completely randomly.

Pair Corralation between Garuda Construction and Baazar Style

Assuming the 90 days trading horizon Garuda Construction Engineering is expected to generate 1.94 times more return on investment than Baazar Style. However, Garuda Construction is 1.94 times more volatile than Baazar Style Retail. It trades about 0.14 of its potential returns per unit of risk. Baazar Style Retail is currently generating about 0.11 per unit of risk. If you would invest  8,254  in Garuda Construction Engineering on September 19, 2024 and sell it today you would earn a total of  1,231  from holding Garuda Construction Engineering or generate 14.91% return on investment over 90 days.

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

Garuda Construction Engineerin  vs.  Baazar Style Retail

Garuda Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Garuda Construction Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Baazar Style Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baazar Style Retail has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Baazar Style is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Garuda Construction and Baazar Style

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

The idea behind Garuda Construction Engineering and Baazar Style Retail 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.