Correlation Between Bukit Darmo and Perdana Gapura

Can any of the company-specific risk be diversified away by investing in both Bukit Darmo and Perdana Gapura 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 Bukit Darmo and Perdana Gapura into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bukit Darmo Property and Perdana Gapura Prima, you can compare the effects of market volatilities on Bukit Darmo and Perdana Gapura 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 Bukit Darmo with a short position of Perdana Gapura. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bukit Darmo and Perdana Gapura.

Diversification Opportunities for Bukit Darmo and Perdana Gapura

0.15

Correlation Coefficient

Bukit Darmo  Perdana Gapura

Average diversification

The 3 months correlation between Bukit and Perdana is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bukit Darmo Property and Perdana Gapura Prima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perdana Gapura Prima and Bukit Darmo 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 Bukit Darmo Property are associated (or correlated) with Perdana Gapura. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perdana Gapura Prima has no effect on the direction of Bukit Darmo i.e., Bukit Darmo and Perdana Gapura go up and down completely randomly.

Pair Corralation between Bukit Darmo and Perdana Gapura

Assuming the 90 days trading horizon Bukit Darmo is expected to generate 1.27 times less return on investment than Perdana Gapura. In addition to that, Bukit Darmo is 2.33 times more volatile than Perdana Gapura Prima. It trades about 0.02 of its total potential returns per unit of risk. Perdana Gapura Prima is currently generating about 0.07 per unit of volatility. If you would invest  8,200  in Perdana Gapura Prima on September 5, 2024 and sell it today you would earn a total of  700.00  from holding Perdana Gapura Prima or generate 8.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.82%
Values	Daily Returns

Bukit Darmo Property  vs.  Perdana Gapura Prima

Bukit Darmo Property

Risk-Adjusted Performance

14 of 100

Good

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

Perdana Gapura Prima

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bukit Darmo and Perdana Gapura

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

The idea behind Bukit Darmo Property and Perdana Gapura Prima 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.