Correlation Between Hartadinata Abadi and Panca Budi

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

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

Diversification Opportunities for Hartadinata Abadi and Panca Budi

-0.01

Correlation Coefficient

Hartadinata Abadi  Panca Budi

Good diversification

The 3 months correlation between Hartadinata and Panca is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Hartadinata Abadi Tbk 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 Hartadinata Abadi 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 Hartadinata Abadi Tbk 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 Hartadinata Abadi i.e., Hartadinata Abadi and Panca Budi go up and down completely randomly.

Pair Corralation between Hartadinata Abadi and Panca Budi

Assuming the 90 days trading horizon Hartadinata Abadi Tbk is expected to generate 1.95 times more return on investment than Panca Budi. However, Hartadinata Abadi is 1.95 times more volatile than Panca Budi Idaman. It trades about 0.21 of its potential returns per unit of risk. Panca Budi Idaman is currently generating about 0.04 per unit of risk. If you would invest  32,800  in Hartadinata Abadi Tbk on December 2, 2024 and sell it today you would earn a total of  14,400  from holding Hartadinata Abadi Tbk or generate 43.9% return on investment over 90 days.

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

Hartadinata Abadi Tbk  vs.  Panca Budi Idaman

Hartadinata Abadi Tbk

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hartadinata Abadi Tbk are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Hartadinata Abadi disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 Hartadinata Abadi and Panca Budi

The main advantage of trading using opposite Hartadinata Abadi and Panca Budi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartadinata Abadi 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 Hartadinata Abadi Tbk 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.