Correlation Between Perdana Gapura and Bintang Mitra

Can any of the company-specific risk be diversified away by investing in both Perdana Gapura and Bintang Mitra 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 Perdana Gapura and Bintang Mitra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perdana Gapura Prima and Bintang Mitra Semestaraya, you can compare the effects of market volatilities on Perdana Gapura and Bintang Mitra 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 Perdana Gapura with a short position of Bintang Mitra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perdana Gapura and Bintang Mitra.

Diversification Opportunities for Perdana Gapura and Bintang Mitra

0.73

Correlation Coefficient

Perdana Gapura  Bintang Mitra

Poor diversification

The 3 months correlation between Perdana and Bintang is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Perdana Gapura Prima and Bintang Mitra Semestaraya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bintang Mitra Semestaraya and Perdana Gapura 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 Perdana Gapura Prima are associated (or correlated) with Bintang Mitra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bintang Mitra Semestaraya has no effect on the direction of Perdana Gapura i.e., Perdana Gapura and Bintang Mitra go up and down completely randomly.

Pair Corralation between Perdana Gapura and Bintang Mitra

Assuming the 90 days trading horizon Perdana Gapura Prima is expected to under-perform the Bintang Mitra. In addition to that, Perdana Gapura is 1.11 times more volatile than Bintang Mitra Semestaraya. It trades about -0.05 of its total potential returns per unit of risk. Bintang Mitra Semestaraya is currently generating about -0.04 per unit of volatility. If you would invest  33,200  in Bintang Mitra Semestaraya on September 13, 2024 and sell it today you would lose (1,400) from holding Bintang Mitra Semestaraya or give up 4.22% of portfolio value over 90 days.

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

Perdana Gapura Prima  vs.  Bintang Mitra Semestaraya

Perdana Gapura Prima

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bintang Mitra Semestaraya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bintang Mitra Semestaraya has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Bintang Mitra 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 Perdana Gapura and Bintang Mitra

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

The idea behind Perdana Gapura Prima and Bintang Mitra Semestaraya 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.