Correlation Between Panca Budi and Unggul Indah

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

Diversification Opportunities for Panca Budi and Unggul Indah

-0.33

Correlation Coefficient

Panca Budi  Unggul Indah

Very good diversification

The 3 months correlation between Panca and Unggul is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Panca Budi Idaman and Unggul Indah Cahaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unggul Indah Cahaya 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 Unggul Indah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unggul Indah Cahaya has no effect on the direction of Panca Budi i.e., Panca Budi and Unggul Indah go up and down completely randomly.

Pair Corralation between Panca Budi and Unggul Indah

Assuming the 90 days trading horizon Panca Budi Idaman is expected to generate 1.31 times more return on investment than Unggul Indah. However, Panca Budi is 1.31 times more volatile than Unggul Indah Cahaya. It trades about 0.0 of its potential returns per unit of risk. Unggul Indah Cahaya is currently generating about -0.09 per unit of risk. If you would invest  51,500  in Panca Budi Idaman on December 30, 2024 and sell it today you would lose (500.00) from holding Panca Budi Idaman or give up 0.97% of portfolio value over 90 days.

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

Panca Budi Idaman  vs.  Unggul Indah Cahaya

Panca Budi Idaman

Risk-Adjusted Performance

Very Weak

Over the last 90 days Panca Budi Idaman has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Panca Budi is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Unggul Indah Cahaya

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unggul Indah Cahaya has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 Unggul Indah

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

The idea behind Panca Budi Idaman and Unggul Indah Cahaya 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 Transaction History module to view history of all your transactions and understand their impact on performance.