Correlation Between PT Charlie and Garuda Metalindo

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

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

Diversification Opportunities for PT Charlie and Garuda Metalindo

-0.43

Correlation Coefficient

PT Charlie  Garuda Metalindo

Very good diversification

The 3 months correlation between RSCH and Garuda is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding PT Charlie Hospital 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 PT Charlie 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 PT Charlie Hospital 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 PT Charlie i.e., PT Charlie and Garuda Metalindo go up and down completely randomly.

Pair Corralation between PT Charlie and Garuda Metalindo

Assuming the 90 days trading horizon PT Charlie Hospital is expected to under-perform the Garuda Metalindo. In addition to that, PT Charlie is 1.47 times more volatile than Garuda Metalindo Tbk. It trades about -0.02 of its total potential returns per unit of risk. Garuda Metalindo Tbk is currently generating about 0.2 per unit of volatility. If you would invest  105,000  in Garuda Metalindo Tbk on September 18, 2024 and sell it today you would earn a total of  24,500  from holding Garuda Metalindo Tbk or generate 23.33% return on investment over 90 days.

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

PT Charlie Hospital  vs.  Garuda Metalindo Tbk

PT Charlie Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Charlie Hospital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, PT Charlie is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Garuda Metalindo Tbk

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Garuda Metalindo Tbk are ranked lower than 15 (%) 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 PT Charlie and Garuda Metalindo

The main advantage of trading using opposite PT Charlie and Garuda Metalindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Charlie 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 PT Charlie Hospital 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.