Correlation Between Garudafood Putra and Victoria Care

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

Diversification Opportunities for Garudafood Putra and Victoria Care

0.36

Correlation Coefficient

Garudafood Putra  Victoria Care

Weak diversification

The 3 months correlation between Garudafood and Victoria is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Garudafood Putra Putri and Victoria Care Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victoria Care 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 Victoria Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victoria Care Indonesia has no effect on the direction of Garudafood Putra i.e., Garudafood Putra and Victoria Care go up and down completely randomly.

Pair Corralation between Garudafood Putra and Victoria Care

Assuming the 90 days trading horizon Garudafood Putra is expected to generate 2.14 times less return on investment than Victoria Care. In addition to that, Garudafood Putra is 1.06 times more volatile than Victoria Care Indonesia. It trades about 0.09 of its total potential returns per unit of risk. Victoria Care Indonesia is currently generating about 0.21 per unit of volatility. If you would invest  62,500  in Victoria Care Indonesia on October 6, 2024 and sell it today you would earn a total of  3,000  from holding Victoria Care Indonesia or generate 4.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Garudafood Putra Putri  vs.  Victoria Care 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 current stock price mess, may contribute to short-term losses for the institutional investors.

Victoria Care Indonesia

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Victoria Care Indonesia are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Victoria Care 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 Victoria Care

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

The idea behind Garudafood Putra Putri and Victoria Care 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.