Correlation Between Paramita Bangun and Indonesia Pondasi

Can any of the company-specific risk be diversified away by investing in both Paramita Bangun and Indonesia Pondasi 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 Paramita Bangun and Indonesia Pondasi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Paramita Bangun Sarana and Indonesia Pondasi Raya, you can compare the effects of market volatilities on Paramita Bangun and Indonesia Pondasi 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 Paramita Bangun with a short position of Indonesia Pondasi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramita Bangun and Indonesia Pondasi.

Diversification Opportunities for Paramita Bangun and Indonesia Pondasi

-0.78

Correlation Coefficient

Paramita Bangun  Indonesia Pondasi

Pay attention - limited upside

The 3 months correlation between Paramita and Indonesia is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Paramita Bangun Sarana and Indonesia Pondasi Raya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indonesia Pondasi Raya and Paramita Bangun 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 Paramita Bangun Sarana are associated (or correlated) with Indonesia Pondasi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indonesia Pondasi Raya has no effect on the direction of Paramita Bangun i.e., Paramita Bangun and Indonesia Pondasi go up and down completely randomly.

Pair Corralation between Paramita Bangun and Indonesia Pondasi

Assuming the 90 days trading horizon Paramita Bangun Sarana is expected to generate 0.53 times more return on investment than Indonesia Pondasi. However, Paramita Bangun Sarana is 1.88 times less risky than Indonesia Pondasi. It trades about 0.1 of its potential returns per unit of risk. Indonesia Pondasi Raya is currently generating about 0.02 per unit of risk. If you would invest  28,273  in Paramita Bangun Sarana on October 12, 2024 and sell it today you would earn a total of  7,727  from holding Paramita Bangun Sarana or generate 27.33% return on investment over 90 days.

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

Paramita Bangun Sarana  vs.  Indonesia Pondasi Raya

Paramita Bangun Sarana

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Paramita Bangun Sarana are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Paramita Bangun disclosed solid returns over the last few months and may actually be approaching a breakup point.

Indonesia Pondasi Raya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indonesia Pondasi Raya 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 Paramita Bangun and Indonesia Pondasi

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

The idea behind Paramita Bangun Sarana and Indonesia Pondasi Raya 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.