Correlation Between Intanwijaya Internasional and Panca Budi

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

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

Diversification Opportunities for Intanwijaya Internasional and Panca Budi

-0.12

Correlation Coefficient

Intanwijaya Internasional  Panca Budi

Good diversification

The 3 months correlation between Intanwijaya and Panca is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Intanwijaya Internasional 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 Intanwijaya Internasional 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 Intanwijaya Internasional 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 Intanwijaya Internasional i.e., Intanwijaya Internasional and Panca Budi go up and down completely randomly.

Pair Corralation between Intanwijaya Internasional and Panca Budi

Assuming the 90 days trading horizon Intanwijaya Internasional is expected to generate 6.71 times less return on investment than Panca Budi. But when comparing it to its historical volatility, Intanwijaya Internasional Tbk is 1.21 times less risky than Panca Budi. It trades about 0.03 of its potential returns per unit of risk. Panca Budi Idaman is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  46,000  in Panca Budi Idaman on September 13, 2024 and sell it today you would earn a total of  7,500  from holding Panca Budi Idaman or generate 16.3% return on investment over 90 days.

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

Intanwijaya Internasional Tbk  vs.  Panca Budi Idaman

Intanwijaya Internasional

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intanwijaya Internasional Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Intanwijaya Internasional is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Panca Budi Idaman

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Panca Budi Idaman are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Panca Budi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intanwijaya Internasional and Panca Budi

The main advantage of trading using opposite Intanwijaya Internasional and Panca Budi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intanwijaya Internasional 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 Intanwijaya Internasional 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.