Correlation Between Perdana Bangun and Inter Delta

Can any of the company-specific risk be diversified away by investing in both Perdana Bangun and Inter Delta 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 Perdana Bangun and Inter Delta into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perdana Bangun Pusaka and Inter Delta Tbk, you can compare the effects of market volatilities on Perdana Bangun and Inter Delta 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 Perdana Bangun with a short position of Inter Delta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perdana Bangun and Inter Delta.

Diversification Opportunities for Perdana Bangun and Inter Delta

-0.29

Correlation Coefficient

Perdana Bangun  Inter Delta

Very good diversification

The 3 months correlation between Perdana and Inter is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Perdana Bangun Pusaka and Inter Delta Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Delta Tbk and Perdana Bangun 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 Perdana Bangun Pusaka are associated (or correlated) with Inter Delta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Delta Tbk has no effect on the direction of Perdana Bangun i.e., Perdana Bangun and Inter Delta go up and down completely randomly.

Pair Corralation between Perdana Bangun and Inter Delta

Assuming the 90 days trading horizon Perdana Bangun Pusaka is expected to generate 1.16 times more return on investment than Inter Delta. However, Perdana Bangun is 1.16 times more volatile than Inter Delta Tbk. It trades about 0.12 of its potential returns per unit of risk. Inter Delta Tbk is currently generating about 0.03 per unit of risk. If you would invest  94,000  in Perdana Bangun Pusaka on September 16, 2024 and sell it today you would earn a total of  58,000  from holding Perdana Bangun Pusaka or generate 61.7% return on investment over 90 days.

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

Perdana Bangun Pusaka  vs.  Inter Delta Tbk

Perdana Bangun Pusaka

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perdana Bangun Pusaka are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Perdana Bangun disclosed solid returns over the last few months and may actually be approaching a breakup point.

Inter Delta Tbk

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Inter Delta Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Inter Delta disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perdana Bangun and Inter Delta

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

The idea behind Perdana Bangun Pusaka and Inter Delta Tbk 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.