Correlation Between Diagnos Laboratorium and Bundamedik Tbk

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

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

Diversification Opportunities for Diagnos Laboratorium and Bundamedik Tbk

0.48

Correlation Coefficient

Diagnos Laboratorium  Bundamedik Tbk

Very weak diversification

The 3 months correlation between Diagnos and Bundamedik is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Diagnos Laboratorium Utama and Bundamedik Tbk PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bundamedik Tbk PT and Diagnos Laboratorium 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 Diagnos Laboratorium Utama are associated (or correlated) with Bundamedik Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bundamedik Tbk PT has no effect on the direction of Diagnos Laboratorium i.e., Diagnos Laboratorium and Bundamedik Tbk go up and down completely randomly.

Pair Corralation between Diagnos Laboratorium and Bundamedik Tbk

Assuming the 90 days trading horizon Diagnos Laboratorium Utama is expected to generate 1.0 times more return on investment than Bundamedik Tbk. However, Diagnos Laboratorium Utama is 1.0 times less risky than Bundamedik Tbk. It trades about -0.1 of its potential returns per unit of risk. Bundamedik Tbk PT is currently generating about -0.11 per unit of risk. If you would invest  23,400  in Diagnos Laboratorium Utama on September 3, 2024 and sell it today you would lose (1,400) from holding Diagnos Laboratorium Utama or give up 5.98% of portfolio value over 90 days.

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

Diagnos Laboratorium Utama  vs.  Bundamedik Tbk PT

Diagnos Laboratorium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diagnos Laboratorium Utama 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 forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bundamedik Tbk PT

Risk-Adjusted Performance

0 of 100

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 latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Diagnos Laboratorium and Bundamedik Tbk

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

The idea behind Diagnos Laboratorium Utama and Bundamedik Tbk PT 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.