Correlation Between Panca Budi and Hartadinata Abadi

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

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

Diversification Opportunities for Panca Budi and Hartadinata Abadi

-0.49

Correlation Coefficient

Panca Budi  Hartadinata Abadi

Very good diversification

The 3 months correlation between Panca and Hartadinata is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Panca Budi Idaman and Hartadinata Abadi Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartadinata Abadi Tbk and Panca Budi 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 Panca Budi Idaman are associated (or correlated) with Hartadinata Abadi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartadinata Abadi Tbk has no effect on the direction of Panca Budi i.e., Panca Budi and Hartadinata Abadi go up and down completely randomly.

Pair Corralation between Panca Budi and Hartadinata Abadi

Assuming the 90 days trading horizon Panca Budi Idaman is expected to under-perform the Hartadinata Abadi. But the stock apears to be less risky and, when comparing its historical volatility, Panca Budi Idaman is 4.3 times less risky than Hartadinata Abadi. The stock trades about -0.1 of its potential returns per unit of risk. The Hartadinata Abadi Tbk is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  32,600  in Hartadinata Abadi Tbk on October 21, 2024 and sell it today you would earn a total of  3,600  from holding Hartadinata Abadi Tbk or generate 11.04% return on investment over 90 days.

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

Panca Budi Idaman  vs.  Hartadinata Abadi Tbk

Panca Budi Idaman

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Panca Budi Idaman are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Panca Budi is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Hartadinata Abadi Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hartadinata Abadi 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Panca Budi and Hartadinata Abadi

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

The idea behind Panca Budi Idaman and Hartadinata Abadi 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.