Correlation Between Planet Properindo and PT Boston

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

By analyzing existing cross correlation between Planet Properindo Jaya and PT Boston Furniture, you can compare the effects of market volatilities on Planet Properindo and PT Boston 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 Planet Properindo with a short position of PT Boston. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Properindo and PT Boston.

Diversification Opportunities for Planet Properindo and PT Boston

0.89

Correlation Coefficient

Planet Properindo  PT Boston

Very poor diversification

The 3 months correlation between Planet and SOFA is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Planet Properindo Jaya and PT Boston Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Boston Furniture and Planet Properindo 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 Planet Properindo Jaya are associated (or correlated) with PT Boston. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Boston Furniture has no effect on the direction of Planet Properindo i.e., Planet Properindo and PT Boston go up and down completely randomly.

Pair Corralation between Planet Properindo and PT Boston

Assuming the 90 days trading horizon Planet Properindo is expected to generate 3.46 times less return on investment than PT Boston. In addition to that, Planet Properindo is 1.1 times more volatile than PT Boston Furniture. It trades about 0.12 of its total potential returns per unit of risk. PT Boston Furniture is currently generating about 0.44 per unit of volatility. If you would invest  1,900  in PT Boston Furniture on September 14, 2024 and sell it today you would earn a total of  4,400  from holding PT Boston Furniture or generate 231.58% return on investment over 90 days.

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

Planet Properindo Jaya  vs.  PT Boston Furniture

Planet Properindo Jaya

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Properindo Jaya are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Planet Properindo disclosed solid returns over the last few months and may actually be approaching a breakup point.

PT Boston Furniture

Risk-Adjusted Performance

34 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in PT Boston Furniture are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Boston disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Planet Properindo and PT Boston

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

The idea behind Planet Properindo Jaya and PT Boston Furniture 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.