Correlation Between Pembangunan Graha and PT Sarimelati

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

By analyzing existing cross correlation between Pembangunan Graha Lestari and PT Sarimelati Kencana, you can compare the effects of market volatilities on Pembangunan Graha and PT Sarimelati 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 Pembangunan Graha with a short position of PT Sarimelati. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembangunan Graha and PT Sarimelati.

Diversification Opportunities for Pembangunan Graha and PT Sarimelati

-0.2

Correlation Coefficient

Pembangunan Graha  PT Sarimelati

Good diversification

The 3 months correlation between Pembangunan and PZZA is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Pembangunan Graha Lestari and PT Sarimelati Kencana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Sarimelati Kencana and Pembangunan Graha 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 Pembangunan Graha Lestari are associated (or correlated) with PT Sarimelati. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Sarimelati Kencana has no effect on the direction of Pembangunan Graha i.e., Pembangunan Graha and PT Sarimelati go up and down completely randomly.

Pair Corralation between Pembangunan Graha and PT Sarimelati

Assuming the 90 days trading horizon Pembangunan Graha Lestari is expected to under-perform the PT Sarimelati. But the stock apears to be less risky and, when comparing its historical volatility, Pembangunan Graha Lestari is 1.63 times less risky than PT Sarimelati. The stock trades about -0.13 of its potential returns per unit of risk. The PT Sarimelati Kencana is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  11,400  in PT Sarimelati Kencana on October 20, 2024 and sell it today you would earn a total of  5,000  from holding PT Sarimelati Kencana or generate 43.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Pembangunan Graha Lestari  vs.  PT Sarimelati Kencana

Pembangunan Graha Lestari

Risk-Adjusted Performance

0 of 100

Very Weak

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

PT Sarimelati Kencana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Sarimelati Kencana 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 Pembangunan Graha and PT Sarimelati

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

The idea behind Pembangunan Graha Lestari and PT Sarimelati Kencana 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.