Correlation Between Garudafood Putra and Pt Pakuan

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

Diversification Opportunities for Garudafood Putra and Pt Pakuan

-0.03

Correlation Coefficient

Garudafood Putra  Pt Pakuan

Good diversification

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

Pair Corralation between Garudafood Putra and Pt Pakuan

Assuming the 90 days trading horizon Garudafood Putra Putri is expected to under-perform the Pt Pakuan. But the stock apears to be less risky and, when comparing its historical volatility, Garudafood Putra Putri is 5.44 times less risky than Pt Pakuan. The stock trades about -0.01 of its potential returns per unit of risk. The Pt Pakuan Tbk is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  94,899  in Pt Pakuan Tbk on October 7, 2024 and sell it today you would lose (21,399) from holding Pt Pakuan Tbk or give up 22.55% of portfolio value over 90 days.

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

Garudafood Putra Putri  vs.  Pt Pakuan 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.

Pt Pakuan Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Garudafood Putra Putri and Pt Pakuan 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.