Correlation Between Garuda Indonesia and Soechi Lines

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

Diversification Opportunities for Garuda Indonesia and Soechi Lines

0.65

Correlation Coefficient

Garuda Indonesia  Soechi Lines

Poor diversification

The 3 months correlation between Garuda and Soechi is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Indonesia Persero and Soechi Lines Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soechi Lines Tbk 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 Soechi Lines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soechi Lines Tbk has no effect on the direction of Garuda Indonesia i.e., Garuda Indonesia and Soechi Lines go up and down completely randomly.

Pair Corralation between Garuda Indonesia and Soechi Lines

Assuming the 90 days trading horizon Garuda Indonesia Persero is expected to generate 1.62 times more return on investment than Soechi Lines. However, Garuda Indonesia is 1.62 times more volatile than Soechi Lines Tbk. It trades about 0.02 of its potential returns per unit of risk. Soechi Lines Tbk is currently generating about 0.02 per unit of risk. If you would invest  5,100  in Garuda Indonesia Persero on September 29, 2024 and sell it today you would earn a total of  200.00  from holding Garuda Indonesia Persero or generate 3.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.21%
Values	Daily Returns

Garuda Indonesia Persero  vs.  Soechi Lines Tbk

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.

Soechi Lines Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Soechi Lines Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Garuda Indonesia and Soechi Lines

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

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