Correlation Between Garda Tujuh and Resource Alam

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

Diversification Opportunities for Garda Tujuh and Resource Alam

0.91

Correlation Coefficient

Garda Tujuh  Resource Alam

Almost no diversification

The 3 months correlation between Garda and Resource is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Garda Tujuh Buana and Resource Alam Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resource Alam Indonesia 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 Resource Alam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resource Alam Indonesia has no effect on the direction of Garda Tujuh i.e., Garda Tujuh and Resource Alam go up and down completely randomly.

Pair Corralation between Garda Tujuh and Resource Alam

Assuming the 90 days trading horizon Garda Tujuh Buana is expected to under-perform the Resource Alam. But the stock apears to be less risky and, when comparing its historical volatility, Garda Tujuh Buana is 1.14 times less risky than Resource Alam. The stock trades about -0.11 of its potential returns per unit of risk. The Resource Alam Indonesia is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  56,500  in Resource Alam Indonesia on September 12, 2024 and sell it today you would lose (3,000) from holding Resource Alam Indonesia or give up 5.31% of portfolio value over 90 days.

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

Garda Tujuh Buana  vs.  Resource Alam Indonesia

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 latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Resource Alam Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Resource Alam Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Resource Alam 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 Garda Tujuh and Resource Alam

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

The idea behind Garda Tujuh Buana and Resource Alam 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.