Correlation Between Garuda Construction and Som Distilleries

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

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

Diversification Opportunities for Garuda Construction and Som Distilleries

0.63

Correlation Coefficient

Garuda Construction  Som Distilleries

Poor diversification

The 3 months correlation between Garuda and Som is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Construction Engineerin and Som Distilleries Breweries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Som Distilleries Bre and Garuda Construction 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 Garuda Construction Engineering are associated (or correlated) with Som Distilleries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Som Distilleries Bre has no effect on the direction of Garuda Construction i.e., Garuda Construction and Som Distilleries go up and down completely randomly.

Pair Corralation between Garuda Construction and Som Distilleries

Assuming the 90 days trading horizon Garuda Construction Engineering is expected to generate 2.0 times more return on investment than Som Distilleries. However, Garuda Construction is 2.0 times more volatile than Som Distilleries Breweries. It trades about 0.0 of its potential returns per unit of risk. Som Distilleries Breweries is currently generating about -0.03 per unit of risk. If you would invest  10,636  in Garuda Construction Engineering on September 20, 2024 and sell it today you would lose (344.00) from holding Garuda Construction Engineering or give up 3.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	74.19%
Values	Daily Returns

Garuda Construction Engineerin  vs.  Som Distilleries Breweries

Garuda Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Garuda Construction Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Garuda Construction is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Som Distilleries Bre

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Som Distilleries Breweries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Som Distilleries is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Garuda Construction and Som Distilleries

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

The idea behind Garuda Construction Engineering and Som Distilleries Breweries 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.