Correlation Between Garudafood Putra and Dharma Satya

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

Diversification Opportunities for Garudafood Putra and Dharma Satya

0.26

Correlation Coefficient

Garudafood Putra  Dharma Satya

Modest diversification

The 3 months correlation between Garudafood and Dharma is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Garudafood Putra Putri and Dharma Satya Nusantara in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dharma Satya Nusantara 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 Dharma Satya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dharma Satya Nusantara has no effect on the direction of Garudafood Putra i.e., Garudafood Putra and Dharma Satya go up and down completely randomly.

Pair Corralation between Garudafood Putra and Dharma Satya

Assuming the 90 days trading horizon Garudafood Putra Putri is expected to generate 0.34 times more return on investment than Dharma Satya. However, Garudafood Putra Putri is 2.96 times less risky than Dharma Satya. It trades about -0.08 of its potential returns per unit of risk. Dharma Satya Nusantara is currently generating about -0.09 per unit of risk. If you would invest  40,000  in Garudafood Putra Putri on December 2, 2024 and sell it today you would lose (2,200) from holding Garudafood Putra Putri or give up 5.5% of portfolio value over 90 days.

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

Garudafood Putra Putri  vs.  Dharma Satya Nusantara

Garudafood Putra Putri

Risk-Adjusted Performance

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.

Dharma Satya Nusantara

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dharma Satya Nusantara 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Garudafood Putra and Dharma Satya

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

The idea behind Garudafood Putra Putri and Dharma Satya Nusantara 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.