Correlation Between Graha Layar and MD Pictures

Can any of the company-specific risk be diversified away by investing in both Graha Layar and MD Pictures 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 Graha Layar and MD Pictures into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Graha Layar Prima and MD Pictures Tbk, you can compare the effects of market volatilities on Graha Layar and MD Pictures 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 Graha Layar with a short position of MD Pictures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graha Layar and MD Pictures.

Diversification Opportunities for Graha Layar and MD Pictures

-0.63

Correlation Coefficient

Graha Layar  MD Pictures

Excellent diversification

The 3 months correlation between Graha and FILM is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Graha Layar Prima and MD Pictures Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MD Pictures Tbk and Graha Layar 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 Graha Layar Prima are associated (or correlated) with MD Pictures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MD Pictures Tbk has no effect on the direction of Graha Layar i.e., Graha Layar and MD Pictures go up and down completely randomly.

Pair Corralation between Graha Layar and MD Pictures

Assuming the 90 days trading horizon Graha Layar Prima is expected to generate 0.34 times more return on investment than MD Pictures. However, Graha Layar Prima is 2.94 times less risky than MD Pictures. It trades about 0.05 of its potential returns per unit of risk. MD Pictures Tbk is currently generating about -0.01 per unit of risk. If you would invest  192,500  in Graha Layar Prima on September 14, 2024 and sell it today you would earn a total of  7,500  from holding Graha Layar Prima or generate 3.9% return on investment over 90 days.

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

Graha Layar Prima  vs.  MD Pictures Tbk

Graha Layar Prima

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Graha Layar Prima are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Graha Layar is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

MD Pictures Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MD Pictures Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, MD Pictures 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 Graha Layar and MD Pictures

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

The idea behind Graha Layar Prima and MD Pictures 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.