Correlation Between Pelangi Indah and Dana Brata

Can any of the company-specific risk be diversified away by investing in both Pelangi Indah and Dana Brata 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 Pelangi Indah and Dana Brata into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pelangi Indah Canindo and Dana Brata Luhur, you can compare the effects of market volatilities on Pelangi Indah and Dana Brata 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 Pelangi Indah with a short position of Dana Brata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pelangi Indah and Dana Brata.

Diversification Opportunities for Pelangi Indah and Dana Brata

-0.7

Correlation Coefficient

Pelangi Indah  Dana Brata

Excellent diversification

The 3 months correlation between Pelangi and Dana is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pelangi Indah Canindo and Dana Brata Luhur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Brata Luhur and Pelangi Indah 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 Pelangi Indah Canindo are associated (or correlated) with Dana Brata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Brata Luhur has no effect on the direction of Pelangi Indah i.e., Pelangi Indah and Dana Brata go up and down completely randomly.

Pair Corralation between Pelangi Indah and Dana Brata

Assuming the 90 days trading horizon Pelangi Indah Canindo is expected to generate 7.49 times more return on investment than Dana Brata. However, Pelangi Indah is 7.49 times more volatile than Dana Brata Luhur. It trades about 0.09 of its potential returns per unit of risk. Dana Brata Luhur is currently generating about -0.07 per unit of risk. If you would invest  9,300  in Pelangi Indah Canindo on September 4, 2024 and sell it today you would earn a total of  2,800  from holding Pelangi Indah Canindo or generate 30.11% return on investment over 90 days.

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

Pelangi Indah Canindo  vs.  Dana Brata Luhur

Pelangi Indah Canindo

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pelangi Indah Canindo are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Pelangi Indah disclosed solid returns over the last few months and may actually be approaching a breakup point.

Dana Brata Luhur

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pelangi Indah and Dana Brata

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

The idea behind Pelangi Indah Canindo and Dana Brata Luhur 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.