Correlation Between Garudafood Putra and Japfa Comfeed

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

Diversification Opportunities for Garudafood Putra and Japfa Comfeed

-0.08

Correlation Coefficient

Garudafood Putra  Japfa Comfeed

Good diversification

The 3 months correlation between Garudafood and Japfa is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Garudafood Putra Putri and Japfa Comfeed Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japfa Comfeed Indonesia 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 Japfa Comfeed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japfa Comfeed Indonesia has no effect on the direction of Garudafood Putra i.e., Garudafood Putra and Japfa Comfeed go up and down completely randomly.

Pair Corralation between Garudafood Putra and Japfa Comfeed

Assuming the 90 days trading horizon Garudafood Putra is expected to generate 1.41 times less return on investment than Japfa Comfeed. But when comparing it to its historical volatility, Garudafood Putra Putri is 2.27 times less risky than Japfa Comfeed. It trades about 0.07 of its potential returns per unit of risk. Japfa Comfeed Indonesia is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  185,000  in Japfa Comfeed Indonesia on October 7, 2024 and sell it today you would earn a total of  3,000  from holding Japfa Comfeed Indonesia or generate 1.62% 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.  Japfa Comfeed Indonesia

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.

Japfa Comfeed Indonesia

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Japfa Comfeed Indonesia are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Japfa Comfeed disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Garudafood Putra and Japfa Comfeed

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

The idea behind Garudafood Putra Putri and Japfa Comfeed Indonesia 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.

Check out your portfolio center.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.