Correlation Between Leyand International and Grand House

Can any of the company-specific risk be diversified away by investing in both Leyand International and Grand House 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 Leyand International and Grand House into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Leyand International Tbk and Grand House Mulia, you can compare the effects of market volatilities on Leyand International and Grand House 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 Leyand International with a short position of Grand House. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leyand International and Grand House.

Diversification Opportunities for Leyand International and Grand House

-0.09

Correlation Coefficient

Leyand International  Grand House

Good diversification

The 3 months correlation between Leyand and Grand is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Leyand International Tbk and Grand House Mulia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand House Mulia and Leyand International 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 Leyand International Tbk are associated (or correlated) with Grand House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand House Mulia has no effect on the direction of Leyand International i.e., Leyand International and Grand House go up and down completely randomly.

Pair Corralation between Leyand International and Grand House

Assuming the 90 days trading horizon Leyand International is expected to generate 2.45 times less return on investment than Grand House. In addition to that, Leyand International is 1.18 times more volatile than Grand House Mulia. It trades about 0.01 of its total potential returns per unit of risk. Grand House Mulia is currently generating about 0.04 per unit of volatility. If you would invest  22,800  in Grand House Mulia on November 29, 2024 and sell it today you would earn a total of  9,600  from holding Grand House Mulia or generate 42.11% return on investment over 90 days.

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

Leyand International Tbk  vs.  Grand House Mulia

Leyand International Tbk

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Leyand International Tbk are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Leyand International disclosed solid returns over the last few months and may actually be approaching a breakup point.

Grand House Mulia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grand House Mulia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Leyand International and Grand House

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

The idea behind Leyand International Tbk and Grand House Mulia 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..