Correlation Between PT Indo and Pioneerindo Gourmet

Can any of the company-specific risk be diversified away by investing in both PT Indo and Pioneerindo Gourmet 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 PT Indo and Pioneerindo Gourmet into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Indo Boga and Pioneerindo Gourmet International, you can compare the effects of market volatilities on PT Indo and Pioneerindo Gourmet 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 PT Indo with a short position of Pioneerindo Gourmet. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indo and Pioneerindo Gourmet.

Diversification Opportunities for PT Indo and Pioneerindo Gourmet

0.84

Correlation Coefficient

PT Indo  Pioneerindo Gourmet

Very poor diversification

The 3 months correlation between IBOS and Pioneerindo is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding PT Indo Boga and Pioneerindo Gourmet Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneerindo Gourmet and PT Indo 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 PT Indo Boga are associated (or correlated) with Pioneerindo Gourmet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneerindo Gourmet has no effect on the direction of PT Indo i.e., PT Indo and Pioneerindo Gourmet go up and down completely randomly.

Pair Corralation between PT Indo and Pioneerindo Gourmet

Assuming the 90 days trading horizon PT Indo Boga is expected to under-perform the Pioneerindo Gourmet. In addition to that, PT Indo is 1.39 times more volatile than Pioneerindo Gourmet International. It trades about -0.43 of its total potential returns per unit of risk. Pioneerindo Gourmet International is currently generating about -0.14 per unit of volatility. If you would invest  120,500  in Pioneerindo Gourmet International on September 12, 2024 and sell it today you would lose (30,500) from holding Pioneerindo Gourmet International or give up 25.31% of portfolio value over 90 days.

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

PT Indo Boga  vs.  Pioneerindo Gourmet Internatio

PT Indo Boga

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Indo Boga 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pioneerindo Gourmet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pioneerindo Gourmet International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with PT Indo and Pioneerindo Gourmet

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

The idea behind PT Indo Boga and Pioneerindo Gourmet International 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..