Correlation Between Garuda Indonesia and Bank Of India

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

By analyzing existing cross correlation between Garuda Indonesia Persero and Bank Of India, you can compare the effects of market volatilities on Garuda Indonesia and Bank Of India 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 Indonesia with a short position of Bank Of India. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garuda Indonesia and Bank Of India.

Diversification Opportunities for Garuda Indonesia and Bank Of India

0.0

Correlation Coefficient

Garuda Indonesia  Bank Of India

Pay attention - limited upside

The 3 months correlation between Garuda and Bank is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Indonesia Persero and Bank Of India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Of India and Garuda Indonesia 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 Indonesia Persero are associated (or correlated) with Bank Of India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Of India has no effect on the direction of Garuda Indonesia i.e., Garuda Indonesia and Bank Of India go up and down completely randomly.

Pair Corralation between Garuda Indonesia and Bank Of India

If you would invest (100.00) in Bank Of India on February 28, 2024 and sell it today you would earn a total of  100.00  from holding Bank Of India or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Garuda Indonesia Persero  vs.  Bank Of India

Garuda Indonesia Persero

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Garuda Indonesia Persero 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 basic indicators remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bank Of India

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Of India are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Bank Of India disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Garuda Indonesia and Bank Of India

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

The idea behind Garuda Indonesia Persero and Bank Of India 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.