Correlation Between Hanjaya Mandala and Verena Multi

Can any of the company-specific risk be diversified away by investing in both Hanjaya Mandala and Verena Multi 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 Hanjaya Mandala and Verena Multi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hanjaya Mandala Sampoerna and Verena Multi Finance, you can compare the effects of market volatilities on Hanjaya Mandala and Verena Multi 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 Hanjaya Mandala with a short position of Verena Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjaya Mandala and Verena Multi.

Diversification Opportunities for Hanjaya Mandala and Verena Multi

0.75

Correlation Coefficient

Hanjaya Mandala  Verena Multi

Poor diversification

The 3 months correlation between Hanjaya and Verena is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hanjaya Mandala Sampoerna and Verena Multi Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verena Multi Finance and Hanjaya Mandala 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 Hanjaya Mandala Sampoerna are associated (or correlated) with Verena Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verena Multi Finance has no effect on the direction of Hanjaya Mandala i.e., Hanjaya Mandala and Verena Multi go up and down completely randomly.

Pair Corralation between Hanjaya Mandala and Verena Multi

Assuming the 90 days trading horizon Hanjaya Mandala Sampoerna is expected to under-perform the Verena Multi. But the stock apears to be less risky and, when comparing its historical volatility, Hanjaya Mandala Sampoerna is 1.55 times less risky than Verena Multi. The stock trades about -0.25 of its potential returns per unit of risk. The Verena Multi Finance is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  9,000  in Verena Multi Finance on October 20, 2024 and sell it today you would lose (500.00) from holding Verena Multi Finance or give up 5.56% of portfolio value over 90 days.

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

Hanjaya Mandala Sampoerna  vs.  Verena Multi Finance

Hanjaya Mandala Sampoerna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hanjaya Mandala Sampoerna 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.

Verena Multi Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verena Multi Finance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Verena Multi 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 Hanjaya Mandala and Verena Multi

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

The idea behind Hanjaya Mandala Sampoerna and Verena Multi Finance 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.