Correlation Between Gunung Raja and Panca Budi

Can any of the company-specific risk be diversified away by investing in both Gunung Raja and Panca Budi 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 Gunung Raja and Panca Budi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gunung Raja Paksi and Panca Budi Idaman, you can compare the effects of market volatilities on Gunung Raja and Panca Budi 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 Gunung Raja with a short position of Panca Budi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gunung Raja and Panca Budi.

Diversification Opportunities for Gunung Raja and Panca Budi

-0.12

Correlation Coefficient

Gunung Raja  Panca Budi

Good diversification

The 3 months correlation between Gunung and Panca is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Gunung Raja Paksi and Panca Budi Idaman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panca Budi Idaman and Gunung Raja 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 Gunung Raja Paksi are associated (or correlated) with Panca Budi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panca Budi Idaman has no effect on the direction of Gunung Raja i.e., Gunung Raja and Panca Budi go up and down completely randomly.

Pair Corralation between Gunung Raja and Panca Budi

Assuming the 90 days trading horizon Gunung Raja Paksi is expected to under-perform the Panca Budi. But the stock apears to be less risky and, when comparing its historical volatility, Gunung Raja Paksi is 1.19 times less risky than Panca Budi. The stock trades about -0.26 of its potential returns per unit of risk. The Panca Budi Idaman is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  51,000  in Panca Budi Idaman on December 27, 2024 and sell it today you would earn a total of  0.00  from holding Panca Budi Idaman or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Gunung Raja Paksi  vs.  Panca Budi Idaman

Gunung Raja Paksi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gunung Raja Paksi 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Panca Budi Idaman

Risk-Adjusted Performance

Very Weak

Over the last 90 days Panca Budi Idaman has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Panca Budi 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 Gunung Raja and Panca Budi

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

The idea behind Gunung Raja Paksi and Panca Budi Idaman 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.