Correlation Between Intanwijaya Internasional and Garuda Indonesia

Can any of the company-specific risk be diversified away by investing in both Intanwijaya Internasional and Garuda Indonesia 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 Intanwijaya Internasional and Garuda Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intanwijaya Internasional Tbk and Garuda Indonesia Persero, you can compare the effects of market volatilities on Intanwijaya Internasional and Garuda Indonesia 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 Intanwijaya Internasional with a short position of Garuda Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intanwijaya Internasional and Garuda Indonesia.

Diversification Opportunities for Intanwijaya Internasional and Garuda Indonesia

-0.1

Correlation Coefficient

Intanwijaya Internasional  Garuda Indonesia

Good diversification

The 3 months correlation between Intanwijaya and Garuda is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Intanwijaya Internasional Tbk and Garuda Indonesia Persero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garuda Indonesia Persero and Intanwijaya Internasional 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 Intanwijaya Internasional Tbk are associated (or correlated) with Garuda Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garuda Indonesia Persero has no effect on the direction of Intanwijaya Internasional i.e., Intanwijaya Internasional and Garuda Indonesia go up and down completely randomly.

Pair Corralation between Intanwijaya Internasional and Garuda Indonesia

Assuming the 90 days trading horizon Intanwijaya Internasional Tbk is expected to generate 0.55 times more return on investment than Garuda Indonesia. However, Intanwijaya Internasional Tbk is 1.81 times less risky than Garuda Indonesia. It trades about 0.03 of its potential returns per unit of risk. Garuda Indonesia Persero is currently generating about -0.02 per unit of risk. If you would invest  57,000  in Intanwijaya Internasional Tbk on September 3, 2024 and sell it today you would earn a total of  1,000.00  from holding Intanwijaya Internasional Tbk or generate 1.75% return on investment over 90 days.

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

Intanwijaya Internasional Tbk  vs.  Garuda Indonesia Persero

Intanwijaya Internasional

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intanwijaya Internasional Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Intanwijaya Internasional is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Garuda Indonesia Persero

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Garuda Indonesia Persero has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Garuda Indonesia 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 Intanwijaya Internasional and Garuda Indonesia

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

The idea behind Intanwijaya Internasional Tbk and Garuda Indonesia Persero 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.