Correlation Between Garuda Indonesia and Champion Pacific

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

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

Diversification Opportunities for Garuda Indonesia and Champion Pacific

-0.38

Correlation Coefficient

Garuda Indonesia  Champion Pacific

Very good diversification

The 3 months correlation between Garuda and Champion is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Indonesia Persero and Champion Pacific Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Pacific Ind and Garuda Indonesia 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 Indonesia Persero are associated (or correlated) with Champion Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Pacific Ind has no effect on the direction of Garuda Indonesia i.e., Garuda Indonesia and Champion Pacific go up and down completely randomly.

Pair Corralation between Garuda Indonesia and Champion Pacific

Assuming the 90 days trading horizon Garuda Indonesia Persero is expected to under-perform the Champion Pacific. In addition to that, Garuda Indonesia is 1.66 times more volatile than Champion Pacific Indonesia. It trades about -0.1 of its total potential returns per unit of risk. Champion Pacific Indonesia is currently generating about 0.05 per unit of volatility. If you would invest  50,000  in Champion Pacific Indonesia on September 12, 2024 and sell it today you would earn a total of  2,000  from holding Champion Pacific Indonesia or generate 4.0% return on investment over 90 days.

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

Garuda Indonesia Persero  vs.  Champion Pacific Indonesia

Garuda Indonesia Persero

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Garuda Indonesia Persero has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Champion Pacific Ind

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Champion Pacific Indonesia are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Champion Pacific is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Garuda Indonesia and Champion Pacific

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

The idea behind Garuda Indonesia Persero and Champion Pacific Indonesia 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..