Correlation Between Pioneerindo Gourmet and Lima Dua

Can any of the company-specific risk be diversified away by investing in both Pioneerindo Gourmet and Lima Dua 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 Pioneerindo Gourmet and Lima Dua into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pioneerindo Gourmet International and Lima Dua Lima, you can compare the effects of market volatilities on Pioneerindo Gourmet and Lima Dua 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 Pioneerindo Gourmet with a short position of Lima Dua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pioneerindo Gourmet and Lima Dua.

Diversification Opportunities for Pioneerindo Gourmet and Lima Dua

0.01

Correlation Coefficient

Pioneerindo Gourmet  Lima Dua

Significant diversification

The 3 months correlation between Pioneerindo and Lima is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Pioneerindo Gourmet Internatio and Lima Dua Lima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lima Dua Lima and Pioneerindo Gourmet 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 Pioneerindo Gourmet International are associated (or correlated) with Lima Dua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lima Dua Lima has no effect on the direction of Pioneerindo Gourmet i.e., Pioneerindo Gourmet and Lima Dua go up and down completely randomly.

Pair Corralation between Pioneerindo Gourmet and Lima Dua

Assuming the 90 days trading horizon Pioneerindo Gourmet International is expected to under-perform the Lima Dua. In addition to that, Pioneerindo Gourmet is 1.49 times more volatile than Lima Dua Lima. It trades about -0.07 of its total potential returns per unit of risk. Lima Dua Lima is currently generating about -0.09 per unit of volatility. If you would invest  12,400  in Lima Dua Lima on December 4, 2024 and sell it today you would lose (2,100) from holding Lima Dua Lima or give up 16.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Pioneerindo Gourmet Internatio  vs.  Lima Dua Lima

Pioneerindo Gourmet

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pioneerindo Gourmet International 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Lima Dua Lima

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lima Dua Lima 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Pioneerindo Gourmet and Lima Dua

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

The idea behind Pioneerindo Gourmet International and Lima Dua Lima 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.