Correlation Between Victoria Care and Garudafood Putra

Can any of the company-specific risk be diversified away by investing in both Victoria Care and Garudafood Putra 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 Victoria Care and Garudafood Putra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Victoria Care Indonesia and Garudafood Putra Putri, you can compare the effects of market volatilities on Victoria Care and Garudafood Putra 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 Victoria Care with a short position of Garudafood Putra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victoria Care and Garudafood Putra.

Diversification Opportunities for Victoria Care and Garudafood Putra

0.34

Correlation Coefficient

Victoria Care  Garudafood Putra

Weak diversification

The 3 months correlation between Victoria and Garudafood is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Victoria Care Indonesia and Garudafood Putra Putri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garudafood Putra Putri and Victoria Care 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 Victoria Care Indonesia are associated (or correlated) with Garudafood Putra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garudafood Putra Putri has no effect on the direction of Victoria Care i.e., Victoria Care and Garudafood Putra go up and down completely randomly.

Pair Corralation between Victoria Care and Garudafood Putra

Assuming the 90 days trading horizon Victoria Care Indonesia is expected to under-perform the Garudafood Putra. But the stock apears to be less risky and, when comparing its historical volatility, Victoria Care Indonesia is 2.38 times less risky than Garudafood Putra. The stock trades about -0.04 of its potential returns per unit of risk. The Garudafood Putra Putri is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  41,400  in Garudafood Putra Putri on October 21, 2024 and sell it today you would lose (600.00) from holding Garudafood Putra Putri or give up 1.45% of portfolio value over 90 days.

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

Victoria Care Indonesia  vs.  Garudafood Putra Putri

Victoria Care Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victoria Care Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Victoria Care is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Garudafood Putra Putri

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Victoria Care and Garudafood Putra

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

The idea behind Victoria Care Indonesia and Garudafood Putra Putri 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.