Correlation Between Garudafood Putra and Citatah Tbk

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

Diversification Opportunities for Garudafood Putra and Citatah Tbk

0.06

Correlation Coefficient

Garudafood Putra  Citatah Tbk

Significant diversification

The 3 months correlation between Garudafood and Citatah is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Garudafood Putra Putri and Citatah Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citatah Tbk 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 Citatah Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citatah Tbk has no effect on the direction of Garudafood Putra i.e., Garudafood Putra and Citatah Tbk go up and down completely randomly.

Pair Corralation between Garudafood Putra and Citatah Tbk

Assuming the 90 days trading horizon Garudafood Putra Putri is expected to generate 0.39 times more return on investment than Citatah Tbk. However, Garudafood Putra Putri is 2.59 times less risky than Citatah Tbk. It trades about -0.01 of its potential returns per unit of risk. Citatah Tbk is currently generating about -0.02 per unit of risk. If you would invest  44,048  in Garudafood Putra Putri on October 7, 2024 and sell it today you would lose (3,648) from holding Garudafood Putra Putri or give up 8.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Garudafood Putra Putri  vs.  Citatah Tbk

Garudafood Putra Putri

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Garudafood Putra Putri are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Citatah Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citatah Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Citatah Tbk 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 Citatah Tbk

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

The idea behind Garudafood Putra Putri and Citatah 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.