Correlation Between Putra Mandiri and Pembangunan Graha

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

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

Diversification Opportunities for Putra Mandiri and Pembangunan Graha

0.0

Correlation Coefficient

Putra Mandiri  Pembangunan Graha

Pay attention - limited upside

The 3 months correlation between Putra and Pembangunan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Putra Mandiri Jembar and Pembangunan Graha Lestari in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembangunan Graha Lestari and Putra Mandiri 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 Putra Mandiri Jembar are associated (or correlated) with Pembangunan Graha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembangunan Graha Lestari has no effect on the direction of Putra Mandiri i.e., Putra Mandiri and Pembangunan Graha go up and down completely randomly.

Pair Corralation between Putra Mandiri and Pembangunan Graha

Assuming the 90 days trading horizon Putra Mandiri Jembar is expected to under-perform the Pembangunan Graha. But the stock apears to be less risky and, when comparing its historical volatility, Putra Mandiri Jembar is 2.27 times less risky than Pembangunan Graha. The stock trades about -0.09 of its potential returns per unit of risk. The Pembangunan Graha Lestari is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  18,600  in Pembangunan Graha Lestari on October 21, 2024 and sell it today you would lose (2,400) from holding Pembangunan Graha Lestari or give up 12.9% of portfolio value over 90 days.

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

Putra Mandiri Jembar  vs.  Pembangunan Graha Lestari

Putra Mandiri Jembar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putra Mandiri Jembar 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.

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.

Pair Trading with Putra Mandiri and Pembangunan Graha

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

The idea behind Putra Mandiri Jembar and Pembangunan Graha Lestari 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.