Correlation Between Intraco Penta and Garuda Metalindo

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

By analyzing existing cross correlation between Intraco Penta Tbk and Garuda Metalindo Tbk, you can compare the effects of market volatilities on Intraco Penta and Garuda Metalindo 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 Intraco Penta with a short position of Garuda Metalindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intraco Penta and Garuda Metalindo.

Diversification Opportunities for Intraco Penta and Garuda Metalindo

-0.58

Correlation Coefficient

Intraco Penta  Garuda Metalindo

Excellent diversification

The 3 months correlation between Intraco and Garuda is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Intraco Penta Tbk and Garuda Metalindo Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garuda Metalindo Tbk and Intraco Penta 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 Intraco Penta Tbk are associated (or correlated) with Garuda Metalindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garuda Metalindo Tbk has no effect on the direction of Intraco Penta i.e., Intraco Penta and Garuda Metalindo go up and down completely randomly.

Pair Corralation between Intraco Penta and Garuda Metalindo

Assuming the 90 days trading horizon Intraco Penta is expected to generate 4.55 times less return on investment than Garuda Metalindo. In addition to that, Intraco Penta is 2.91 times more volatile than Garuda Metalindo Tbk. It trades about 0.03 of its total potential returns per unit of risk. Garuda Metalindo Tbk is currently generating about 0.33 per unit of volatility. If you would invest  114,000  in Garuda Metalindo Tbk on September 19, 2024 and sell it today you would earn a total of  15,000  from holding Garuda Metalindo Tbk or generate 13.16% return on investment over 90 days.

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

Intraco Penta Tbk  vs.  Garuda Metalindo Tbk

Intraco Penta Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intraco Penta Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Garuda Metalindo Tbk

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Garuda Metalindo Tbk are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Garuda Metalindo disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intraco Penta and Garuda Metalindo

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

The idea behind Intraco Penta Tbk and Garuda Metalindo Tbk 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.