Correlation Between Som Distilleries and Garuda Construction

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

By analyzing existing cross correlation between Som Distilleries Breweries and Garuda Construction Engineering, you can compare the effects of market volatilities on Som Distilleries and Garuda Construction 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 Som Distilleries with a short position of Garuda Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Som Distilleries and Garuda Construction.

Diversification Opportunities for Som Distilleries and Garuda Construction

0.45

Correlation Coefficient

Som Distilleries  Garuda Construction

Very weak diversification

The 3 months correlation between Som and Garuda is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Som Distilleries Breweries and Garuda Construction Engineerin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garuda Construction and Som Distilleries 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 Som Distilleries Breweries are associated (or correlated) with Garuda Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garuda Construction has no effect on the direction of Som Distilleries i.e., Som Distilleries and Garuda Construction go up and down completely randomly.

Pair Corralation between Som Distilleries and Garuda Construction

Assuming the 90 days trading horizon Som Distilleries Breweries is expected to generate 10.37 times more return on investment than Garuda Construction. However, Som Distilleries is 10.37 times more volatile than Garuda Construction Engineering. It trades about 0.05 of its potential returns per unit of risk. Garuda Construction Engineering is currently generating about 0.1 per unit of risk. If you would invest  4,907  in Som Distilleries Breweries on October 5, 2024 and sell it today you would earn a total of  6,725  from holding Som Distilleries Breweries or generate 137.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	11.8%
Values	Daily Returns

Som Distilleries Breweries  vs.  Garuda Construction Engineerin

Som Distilleries Bre

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Som Distilleries Breweries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Som Distilleries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Garuda Construction

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Garuda Construction Engineering are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Garuda Construction sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Som Distilleries and Garuda Construction

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

The idea behind Som Distilleries Breweries and Garuda Construction Engineering 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.