Correlation Between Garudafood Putra and Multi Bintang

Can any of the company-specific risk be diversified away by investing in both Garudafood Putra and Multi Bintang 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 Multi Bintang 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 Multi Bintang Indonesia, you can compare the effects of market volatilities on Garudafood Putra and Multi Bintang 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 Multi Bintang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garudafood Putra and Multi Bintang.

Diversification Opportunities for Garudafood Putra and Multi Bintang

0.46

Correlation Coefficient

Garudafood Putra  Multi Bintang

Very weak diversification

The 3 months correlation between Garudafood and Multi is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Garudafood Putra Putri and Multi Bintang Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Bintang Indonesia 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 Multi Bintang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Bintang Indonesia has no effect on the direction of Garudafood Putra i.e., Garudafood Putra and Multi Bintang go up and down completely randomly.

Pair Corralation between Garudafood Putra and Multi Bintang

Assuming the 90 days trading horizon Garudafood Putra is expected to generate 1.06 times less return on investment than Multi Bintang. In addition to that, Garudafood Putra is 1.19 times more volatile than Multi Bintang Indonesia. It trades about 0.06 of its total potential returns per unit of risk. Multi Bintang Indonesia is currently generating about 0.08 per unit of volatility. If you would invest  570,327  in Multi Bintang Indonesia on September 16, 2024 and sell it today you would earn a total of  44,673  from holding Multi Bintang Indonesia or generate 7.83% return on investment over 90 days.

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

Garudafood Putra Putri  vs.  Multi Bintang Indonesia

Garudafood Putra Putri

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Garudafood Putra Putri are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Garudafood Putra may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Multi Bintang Indonesia

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Bintang Indonesia are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Multi Bintang may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Garudafood Putra and Multi Bintang

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

The idea behind Garudafood Putra Putri and Multi Bintang Indonesia 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.