Correlation Between Garudafood Putra and Cisarua Mountain

Can any of the company-specific risk be diversified away by investing in both Garudafood Putra and Cisarua Mountain 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 Cisarua Mountain 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 Cisarua Mountain Dairy, you can compare the effects of market volatilities on Garudafood Putra and Cisarua Mountain 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 Cisarua Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garudafood Putra and Cisarua Mountain.

Diversification Opportunities for Garudafood Putra and Cisarua Mountain

0.63

Correlation Coefficient

Garudafood Putra  Cisarua Mountain

Poor diversification

The 3 months correlation between Garudafood and Cisarua is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Garudafood Putra Putri and Cisarua Mountain Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisarua Mountain Dairy 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 Cisarua Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cisarua Mountain Dairy has no effect on the direction of Garudafood Putra i.e., Garudafood Putra and Cisarua Mountain go up and down completely randomly.

Pair Corralation between Garudafood Putra and Cisarua Mountain

Assuming the 90 days trading horizon Garudafood Putra Putri is expected to under-perform the Cisarua Mountain. In addition to that, Garudafood Putra is 1.21 times more volatile than Cisarua Mountain Dairy. It trades about -0.21 of its total potential returns per unit of risk. Cisarua Mountain Dairy is currently generating about -0.1 per unit of volatility. If you would invest  570,000  in Cisarua Mountain Dairy on September 1, 2024 and sell it today you would lose (25,000) from holding Cisarua Mountain Dairy or give up 4.39% of portfolio value over 90 days.

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

Garudafood Putra Putri  vs.  Cisarua Mountain Dairy

Garudafood Putra Putri

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Garudafood Putra Putri are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Garudafood Putra may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Cisarua Mountain Dairy

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cisarua Mountain Dairy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Cisarua Mountain may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Garudafood Putra and Cisarua Mountain

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

The idea behind Garudafood Putra Putri and Cisarua Mountain Dairy 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.