Correlation Between Garudafood Putra and Medikaloka Hermina

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

Diversification Opportunities for Garudafood Putra and Medikaloka Hermina

-0.03

Correlation Coefficient

Garudafood Putra  Medikaloka Hermina

Good diversification

The 3 months correlation between Garudafood and Medikaloka is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Garudafood Putra Putri and Medikaloka Hermina PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medikaloka Hermina 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 Medikaloka Hermina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medikaloka Hermina has no effect on the direction of Garudafood Putra i.e., Garudafood Putra and Medikaloka Hermina go up and down completely randomly.

Pair Corralation between Garudafood Putra and Medikaloka Hermina

Assuming the 90 days trading horizon Garudafood Putra is expected to generate 5.66 times less return on investment than Medikaloka Hermina. But when comparing it to its historical volatility, Garudafood Putra Putri is 1.87 times less risky than Medikaloka Hermina. It trades about 0.05 of its potential returns per unit of risk. Medikaloka Hermina PT is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  148,000  in Medikaloka Hermina PT on October 8, 2024 and sell it today you would earn a total of  9,000  from holding Medikaloka Hermina PT or generate 6.08% return on investment over 90 days.

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

Garudafood Putra Putri  vs.  Medikaloka Hermina PT

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.

Medikaloka Hermina

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Medikaloka Hermina PT are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Medikaloka Hermina may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Garudafood Putra and Medikaloka Hermina

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

The idea behind Garudafood Putra Putri and Medikaloka Hermina PT 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.