Correlation Between Link Net and Graha Layar

Can any of the company-specific risk be diversified away by investing in both Link Net and Graha Layar 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 Link Net and Graha Layar into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Link Net Tbk and Graha Layar Prima, you can compare the effects of market volatilities on Link Net and Graha Layar 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 Link Net with a short position of Graha Layar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Link Net and Graha Layar.

Diversification Opportunities for Link Net and Graha Layar

-0.53

Correlation Coefficient

Link Net  Graha Layar

Excellent diversification

The 3 months correlation between Link and Graha is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Link Net Tbk and Graha Layar Prima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graha Layar Prima and Link Net 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 Link Net Tbk are associated (or correlated) with Graha Layar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graha Layar Prima has no effect on the direction of Link Net i.e., Link Net and Graha Layar go up and down completely randomly.

Pair Corralation between Link Net and Graha Layar

Assuming the 90 days trading horizon Link Net Tbk is expected to under-perform the Graha Layar. In addition to that, Link Net is 2.96 times more volatile than Graha Layar Prima. It trades about -0.2 of its total potential returns per unit of risk. Graha Layar Prima is currently generating about 0.05 per unit of volatility. If you would invest  192,500  in Graha Layar Prima on September 14, 2024 and sell it today you would earn a total of  7,500  from holding Graha Layar Prima or generate 3.9% return on investment over 90 days.

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

Link Net Tbk  vs.  Graha Layar Prima

Link Net Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Link Net Tbk 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.

Graha Layar Prima

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Graha Layar Prima are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Graha Layar is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Link Net and Graha Layar

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

The idea behind Link Net Tbk and Graha Layar Prima 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.