Correlation Between Garudafood Putra and Sariguna Primatirta

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

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

Diversification Opportunities for Garudafood Putra and Sariguna Primatirta

-0.59

Correlation Coefficient

Garudafood Putra  Sariguna Primatirta

Excellent diversification

The 3 months correlation between Garudafood and Sariguna is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Garudafood Putra Putri and Sariguna Primatirta PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sariguna Primatirta and Garudafood Putra 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 Garudafood Putra Putri are associated (or correlated) with Sariguna Primatirta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sariguna Primatirta has no effect on the direction of Garudafood Putra i.e., Garudafood Putra and Sariguna Primatirta go up and down completely randomly.

Pair Corralation between Garudafood Putra and Sariguna Primatirta

Assuming the 90 days trading horizon Garudafood Putra Putri is expected to under-perform the Sariguna Primatirta. But the stock apears to be less risky and, when comparing its historical volatility, Garudafood Putra Putri is 2.5 times less risky than Sariguna Primatirta. The stock trades about -0.05 of its potential returns per unit of risk. The Sariguna Primatirta PT is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  53,340  in Sariguna Primatirta PT on February 21, 2024 and sell it today you would earn a total of  65,660  from holding Sariguna Primatirta PT or generate 123.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.57%
Values	Daily Returns

Garudafood Putra Putri  vs.  Sariguna Primatirta PT

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 basic indicators, Garudafood Putra is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Sariguna Primatirta

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sariguna Primatirta PT are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Sariguna Primatirta disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Garudafood Putra and Sariguna Primatirta

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

The idea behind Garudafood Putra Putri and Sariguna Primatirta PT 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.