Correlation Between Garudafood Putra and Ashmore Asset

Can any of the company-specific risk be diversified away by investing in both Garudafood Putra and Ashmore Asset 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 Garudafood Putra and Ashmore Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Garudafood Putra Putri and Ashmore Asset Management, you can compare the effects of market volatilities on Garudafood Putra and Ashmore Asset 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 Garudafood Putra with a short position of Ashmore Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garudafood Putra and Ashmore Asset.

Diversification Opportunities for Garudafood Putra and Ashmore Asset

0.54

Correlation Coefficient

Garudafood Putra  Ashmore Asset

Very weak diversification

The 3 months correlation between Garudafood and Ashmore is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Garudafood Putra Putri and Ashmore Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Asset Management and Garudafood Putra 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 Garudafood Putra Putri are associated (or correlated) with Ashmore Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Asset Management has no effect on the direction of Garudafood Putra i.e., Garudafood Putra and Ashmore Asset go up and down completely randomly.

Pair Corralation between Garudafood Putra and Ashmore Asset

Assuming the 90 days trading horizon Garudafood Putra Putri is expected to under-perform the Ashmore Asset. But the stock apears to be less risky and, when comparing its historical volatility, Garudafood Putra Putri is 2.32 times less risky than Ashmore Asset. The stock trades about -0.01 of its potential returns per unit of risk. The Ashmore Asset Management is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  70,000  in Ashmore Asset Management on October 12, 2024 and sell it today you would earn a total of  4,000  from holding Ashmore Asset Management or generate 5.71% return on investment over 90 days.

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

Garudafood Putra Putri  vs.  Ashmore Asset Management

Garudafood Putra Putri

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Garudafood Putra Putri has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Garudafood Putra is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Ashmore Asset Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ashmore Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Ashmore Asset 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 Garudafood Putra and Ashmore Asset

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

The idea behind Garudafood Putra Putri and Ashmore Asset 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.