Correlation Between Gunung Raja and Putra Mandiri

Can any of the company-specific risk be diversified away by investing in both Gunung Raja and Putra Mandiri 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 Putra Mandiri 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 Putra Mandiri Jembar, you can compare the effects of market volatilities on Gunung Raja and Putra Mandiri 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 Putra Mandiri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gunung Raja and Putra Mandiri.

Diversification Opportunities for Gunung Raja and Putra Mandiri

0.35

Correlation Coefficient

Gunung Raja  Putra Mandiri

Weak diversification

The 3 months correlation between Gunung and Putra is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Gunung Raja Paksi and Putra Mandiri Jembar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putra Mandiri Jembar 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 Putra Mandiri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putra Mandiri Jembar has no effect on the direction of Gunung Raja i.e., Gunung Raja and Putra Mandiri go up and down completely randomly.

Pair Corralation between Gunung Raja and Putra Mandiri

Assuming the 90 days trading horizon Gunung Raja Paksi is expected to generate 5.08 times more return on investment than Putra Mandiri. However, Gunung Raja is 5.08 times more volatile than Putra Mandiri Jembar. It trades about 0.02 of its potential returns per unit of risk. Putra Mandiri Jembar is currently generating about -0.09 per unit of risk. If you would invest  28,279  in Gunung Raja Paksi on October 21, 2024 and sell it today you would lose (5,079) from holding Gunung Raja Paksi or give up 17.96% of portfolio value over 90 days.

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

Gunung Raja Paksi  vs.  Putra Mandiri Jembar

Gunung Raja Paksi

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gunung Raja Paksi are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Gunung Raja disclosed solid returns over the last few months and may actually be approaching a breakup point.

Putra Mandiri Jembar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putra Mandiri Jembar 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Gunung Raja and Putra Mandiri

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

The idea behind Gunung Raja Paksi and Putra Mandiri Jembar 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.