Correlation Between PT Puri and Lima Dua

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

By analyzing existing cross correlation between PT Puri Sentul and Lima Dua Lima, you can compare the effects of market volatilities on PT Puri and Lima Dua 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 Puri with a short position of Lima Dua. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Puri and Lima Dua.

Diversification Opportunities for PT Puri and Lima Dua

-0.39

Correlation Coefficient

PT Puri  Lima Dua

Very good diversification

The 3 months correlation between KDTN and Lima is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding PT Puri Sentul and Lima Dua Lima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lima Dua Lima and PT Puri 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 Puri Sentul are associated (or correlated) with Lima Dua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lima Dua Lima has no effect on the direction of PT Puri i.e., PT Puri and Lima Dua go up and down completely randomly.

Pair Corralation between PT Puri and Lima Dua

Assuming the 90 days trading horizon PT Puri Sentul is expected to generate 1.13 times more return on investment than Lima Dua. However, PT Puri is 1.13 times more volatile than Lima Dua Lima. It trades about 0.03 of its potential returns per unit of risk. Lima Dua Lima is currently generating about -0.01 per unit of risk. If you would invest  10,494  in PT Puri Sentul on September 14, 2024 and sell it today you would earn a total of  1,506  from holding PT Puri Sentul or generate 14.35% return on investment over 90 days.

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

PT Puri Sentul  vs.  Lima Dua Lima

PT Puri Sentul

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Puri Sentul are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, PT Puri is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Lima Dua Lima

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lima Dua Lima are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Lima Dua disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Puri and Lima Dua

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

The idea behind PT Puri Sentul and Lima Dua Lima 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.