Correlation Between Garda Tujuh and Sumi Indo

Can any of the company-specific risk be diversified away by investing in both Garda Tujuh and Sumi Indo 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 Garda Tujuh and Sumi Indo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Garda Tujuh Buana and Sumi Indo Kabel, you can compare the effects of market volatilities on Garda Tujuh and Sumi Indo 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 Garda Tujuh with a short position of Sumi Indo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garda Tujuh and Sumi Indo.

Diversification Opportunities for Garda Tujuh and Sumi Indo

0.66

Correlation Coefficient

Garda Tujuh  Sumi Indo

Poor diversification

The 3 months correlation between Garda and Sumi is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Garda Tujuh Buana and Sumi Indo Kabel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumi Indo Kabel and Garda Tujuh 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 Garda Tujuh Buana are associated (or correlated) with Sumi Indo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumi Indo Kabel has no effect on the direction of Garda Tujuh i.e., Garda Tujuh and Sumi Indo go up and down completely randomly.

Pair Corralation between Garda Tujuh and Sumi Indo

Assuming the 90 days trading horizon Garda Tujuh Buana is expected to generate 1.1 times more return on investment than Sumi Indo. However, Garda Tujuh is 1.1 times more volatile than Sumi Indo Kabel. It trades about -0.16 of its potential returns per unit of risk. Sumi Indo Kabel is currently generating about -0.18 per unit of risk. If you would invest  28,200  in Garda Tujuh Buana on September 3, 2024 and sell it today you would lose (4,400) from holding Garda Tujuh Buana or give up 15.6% of portfolio value over 90 days.

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

Garda Tujuh Buana  vs.  Sumi Indo Kabel

Garda Tujuh Buana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Garda Tujuh Buana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Sumi Indo Kabel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sumi Indo Kabel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Garda Tujuh and Sumi Indo

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

The idea behind Garda Tujuh Buana and Sumi Indo Kabel 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.