Correlation Between Garudafood Putra and Integra Indocabinet

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

Diversification Opportunities for Garudafood Putra and Integra Indocabinet

-0.38

Correlation Coefficient

Garudafood Putra  Integra Indocabinet

Very good diversification

The 3 months correlation between Garudafood and Integra is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Garudafood Putra Putri and Integra Indocabinet Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integra Indocabinet 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 Integra Indocabinet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integra Indocabinet Tbk has no effect on the direction of Garudafood Putra i.e., Garudafood Putra and Integra Indocabinet go up and down completely randomly.

Pair Corralation between Garudafood Putra and Integra Indocabinet

Assuming the 90 days trading horizon Garudafood Putra Putri is expected to under-perform the Integra Indocabinet. But the stock apears to be less risky and, when comparing its historical volatility, Garudafood Putra Putri is 3.0 times less risky than Integra Indocabinet. The stock trades about -0.08 of its potential returns per unit of risk. The Integra Indocabinet Tbk is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  31,200  in Integra Indocabinet Tbk on December 1, 2024 and sell it today you would earn a total of  3,800  from holding Integra Indocabinet Tbk or generate 12.18% 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.  Integra Indocabinet Tbk

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.

Integra Indocabinet Tbk

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Integra Indocabinet Tbk are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Integra Indocabinet disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Garudafood Putra and Integra Indocabinet

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

The idea behind Garudafood Putra Putri and Integra Indocabinet 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.