Correlation Between Prodia Widyahusada and Diagnos Laboratorium

Can any of the company-specific risk be diversified away by investing in both Prodia Widyahusada and Diagnos Laboratorium 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 Prodia Widyahusada and Diagnos Laboratorium into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Prodia Widyahusada Tbk and Diagnos Laboratorium Utama, you can compare the effects of market volatilities on Prodia Widyahusada and Diagnos Laboratorium 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 Prodia Widyahusada with a short position of Diagnos Laboratorium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prodia Widyahusada and Diagnos Laboratorium.

Diversification Opportunities for Prodia Widyahusada and Diagnos Laboratorium

0.91

Correlation Coefficient

Prodia Widyahusada  Diagnos Laboratorium

Almost no diversification

The 3 months correlation between Prodia and Diagnos is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Prodia Widyahusada Tbk and Diagnos Laboratorium Utama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diagnos Laboratorium and Prodia Widyahusada 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 Prodia Widyahusada Tbk are associated (or correlated) with Diagnos Laboratorium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diagnos Laboratorium has no effect on the direction of Prodia Widyahusada i.e., Prodia Widyahusada and Diagnos Laboratorium go up and down completely randomly.

Pair Corralation between Prodia Widyahusada and Diagnos Laboratorium

Assuming the 90 days trading horizon Prodia Widyahusada Tbk is expected to generate 0.36 times more return on investment than Diagnos Laboratorium. However, Prodia Widyahusada Tbk is 2.75 times less risky than Diagnos Laboratorium. It trades about -0.27 of its potential returns per unit of risk. Diagnos Laboratorium Utama is currently generating about -0.24 per unit of risk. If you would invest  299,000  in Prodia Widyahusada Tbk on September 1, 2024 and sell it today you would lose (23,000) from holding Prodia Widyahusada Tbk or give up 7.69% of portfolio value over 90 days.

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

Prodia Widyahusada Tbk  vs.  Diagnos Laboratorium Utama

Prodia Widyahusada Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prodia Widyahusada Tbk 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 December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Diagnos Laboratorium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diagnos Laboratorium Utama 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 December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Prodia Widyahusada and Diagnos Laboratorium

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

The idea behind Prodia Widyahusada Tbk and Diagnos Laboratorium Utama 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.