Correlation Between One 97 and Garuda Construction

Can any of the company-specific risk be diversified away by investing in both One 97 and Garuda Construction 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 One 97 and Garuda Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between One 97 Communications and Garuda Construction Engineering, you can compare the effects of market volatilities on One 97 and Garuda Construction 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 One 97 with a short position of Garuda Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of One 97 and Garuda Construction.

Diversification Opportunities for One 97 and Garuda Construction

-0.19

Correlation Coefficient

One 97  Garuda Construction

Good diversification

The 3 months correlation between One and Garuda is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding One 97 Communications and Garuda Construction Engineerin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garuda Construction and One 97 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 One 97 Communications are associated (or correlated) with Garuda Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garuda Construction has no effect on the direction of One 97 i.e., One 97 and Garuda Construction go up and down completely randomly.

Pair Corralation between One 97 and Garuda Construction

Assuming the 90 days trading horizon One 97 Communications is expected to generate 0.78 times more return on investment than Garuda Construction. However, One 97 Communications is 1.29 times less risky than Garuda Construction. It trades about 0.19 of its potential returns per unit of risk. Garuda Construction Engineering is currently generating about 0.05 per unit of risk. If you would invest  67,230  in One 97 Communications on September 27, 2024 and sell it today you would earn a total of  31,025  from holding One 97 Communications or generate 46.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	82.26%
Values	Daily Returns

One 97 Communications  vs.  Garuda Construction Engineerin

One 97 Communications

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in One 97 Communications are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, One 97 displayed solid returns over the last few months and may actually be approaching a breakup point.

Garuda Construction

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Garuda Construction Engineering are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Garuda Construction sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with One 97 and Garuda Construction

The main advantage of trading using opposite One 97 and Garuda Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if One 97 position performs unexpectedly, Garuda Construction 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 Construction will offset losses from the drop in Garuda Construction's long position.

The idea behind One 97 Communications and Garuda Construction Engineering 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 CEOs Directory module to screen CEOs from public companies around the world.