Correlation Between Bundamedik Tbk and Prodia Widyahusada

Can any of the company-specific risk be diversified away by investing in both Bundamedik Tbk and Prodia Widyahusada 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 Bundamedik Tbk and Prodia Widyahusada into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Bundamedik Tbk and Prodia Widyahusada

-0.23

Correlation Coefficient

Bundamedik Tbk  Prodia Widyahusada

Very good diversification

The 3 months correlation between Bundamedik and Prodia is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bundamedik Tbk PT and Prodia Widyahusada Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prodia Widyahusada Tbk and Bundamedik Tbk 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 Bundamedik Tbk PT are associated (or correlated) with Prodia Widyahusada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prodia Widyahusada Tbk has no effect on the direction of Bundamedik Tbk i.e., Bundamedik Tbk and Prodia Widyahusada go up and down completely randomly.

Pair Corralation between Bundamedik Tbk and Prodia Widyahusada

Assuming the 90 days trading horizon Bundamedik Tbk PT is expected to under-perform the Prodia Widyahusada. In addition to that, Bundamedik Tbk is 1.71 times more volatile than Prodia Widyahusada Tbk. It trades about -0.03 of its total potential returns per unit of risk. Prodia Widyahusada Tbk is currently generating about -0.04 per unit of volatility. If you would invest  270,000  in Prodia Widyahusada Tbk on December 29, 2024 and sell it today you would lose (11,000) from holding Prodia Widyahusada Tbk or give up 4.07% of portfolio value over 90 days.

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

Bundamedik Tbk PT  vs.  Prodia Widyahusada Tbk

Bundamedik Tbk PT

Risk-Adjusted Performance

Very Weak

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

Prodia Widyahusada Tbk

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Bundamedik Tbk PT and Prodia Widyahusada 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.