Correlation Between Fast Food and Graha Layar

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

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

Diversification Opportunities for Fast Food and Graha Layar

0.1

Correlation Coefficient

Fast Food  Graha Layar

Average diversification

The 3 months correlation between Fast and Graha is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Fast Food Indonesia and Graha Layar Prima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graha Layar Prima and Fast Food 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 Fast Food Indonesia are associated (or correlated) with Graha Layar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graha Layar Prima has no effect on the direction of Fast Food i.e., Fast Food and Graha Layar go up and down completely randomly.

Pair Corralation between Fast Food and Graha Layar

Assuming the 90 days trading horizon Fast Food Indonesia is expected to under-perform the Graha Layar. In addition to that, Fast Food is 1.78 times more volatile than Graha Layar Prima. It trades about -0.25 of its total potential returns per unit of risk. Graha Layar Prima is currently generating about 0.05 per unit of volatility. 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 Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fast Food Indonesia  vs.  Graha Layar Prima

Fast Food Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fast Food Indonesia 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.

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.

Pair Trading with Fast Food and Graha Layar

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

The idea behind Fast Food Indonesia and Graha Layar 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.