Correlation Between Pyridam Farma and Phapros Tbk

Can any of the company-specific risk be diversified away by investing in both Pyridam Farma and Phapros Tbk 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 Pyridam Farma and Phapros Tbk into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pyridam Farma Tbk and Phapros Tbk PT, you can compare the effects of market volatilities on Pyridam Farma and Phapros Tbk 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 Pyridam Farma with a short position of Phapros Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pyridam Farma and Phapros Tbk.

Diversification Opportunities for Pyridam Farma and Phapros Tbk

-0.3

Correlation Coefficient

Pyridam Farma  Phapros Tbk

Very good diversification

The 3 months correlation between Pyridam and Phapros is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Pyridam Farma Tbk and Phapros Tbk PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phapros Tbk PT and Pyridam Farma 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 Pyridam Farma Tbk are associated (or correlated) with Phapros Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phapros Tbk PT has no effect on the direction of Pyridam Farma i.e., Pyridam Farma and Phapros Tbk go up and down completely randomly.

Pair Corralation between Pyridam Farma and Phapros Tbk

Assuming the 90 days trading horizon Pyridam Farma Tbk is expected to under-perform the Phapros Tbk. In addition to that, Pyridam Farma is 3.18 times more volatile than Phapros Tbk PT. It trades about -0.05 of its total potential returns per unit of risk. Phapros Tbk PT is currently generating about -0.08 per unit of volatility. If you would invest  30,400  in Phapros Tbk PT on December 1, 2024 and sell it today you would lose (3,000) from holding Phapros Tbk PT or give up 9.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Pyridam Farma Tbk  vs.  Phapros Tbk PT

Pyridam Farma Tbk

Risk-Adjusted Performance

Very Weak

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

Phapros Tbk PT

Risk-Adjusted Performance

Very Weak

Over the last 90 days Phapros Tbk PT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Pyridam Farma and Phapros Tbk

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

The idea behind Pyridam Farma Tbk and Phapros Tbk PT 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.