Correlation Between Panca Budi and Emdeki Utama

Can any of the company-specific risk be diversified away by investing in both Panca Budi and Emdeki Utama 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 Emdeki Utama 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 Emdeki Utama Tbk, you can compare the effects of market volatilities on Panca Budi and Emdeki Utama 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 Emdeki Utama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Panca Budi and Emdeki Utama.

Diversification Opportunities for Panca Budi and Emdeki Utama

-0.59

Correlation Coefficient

Panca Budi  Emdeki Utama

Excellent diversification

The 3 months correlation between Panca and Emdeki is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Panca Budi Idaman and Emdeki Utama Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emdeki Utama 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 Emdeki Utama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emdeki Utama Tbk has no effect on the direction of Panca Budi i.e., Panca Budi and Emdeki Utama go up and down completely randomly.

Pair Corralation between Panca Budi and Emdeki Utama

Assuming the 90 days trading horizon Panca Budi Idaman is expected to under-perform the Emdeki Utama. In addition to that, Panca Budi is 2.95 times more volatile than Emdeki Utama Tbk. It trades about -0.07 of its total potential returns per unit of risk. Emdeki Utama Tbk is currently generating about -0.19 per unit of volatility. If you would invest  17,500  in Emdeki Utama Tbk on October 7, 2024 and sell it today you would lose (500.00) from holding Emdeki Utama Tbk or give up 2.86% of portfolio value over 90 days.

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

Panca Budi Idaman  vs.  Emdeki Utama Tbk

Panca Budi Idaman

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Panca Budi Idaman are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Panca Budi may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Emdeki Utama Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emdeki Utama Tbk 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 Panca Budi and Emdeki Utama

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

The idea behind Panca Budi Idaman and Emdeki Utama 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .